How Much Tax Do I Pay in Australia? (2025-26)
The 2025-26 Australian tax brackets explained simply, with a full $80,000 worked example including the Medicare levy and take-home pay.
Australia runs a progressive tax system: your income gets sliced up, and each slice is taxed at its own rate. The myth that ruins pay rise celebrations — that moving into a higher bracket means all your income gets taxed at the higher rate — is wrong. Only the dollars above the line do.
Here are the 2025-26 brackets, followed by a real $80,000 salary run through them.
The five rungs of the 2025-26 ladder
For the 2025-26 financial year (1 July 2025 to 30 June 2026), Australian residents pay these rates on their taxable income — what's left after deductions, the work costs the ATO lets you subtract:
- $0 to $18,200 — 0% (the tax-free threshold, the chunk everyone gets tax-free)
- $18,201 to $45,000 — 16%
- $45,001 to $135,000 — 30%
- $135,001 to $190,000 — 37%
- $190,001 and over — 45%
The staircase trick that saves your pay rise
Think of your income as a staircase: each step has its own rate, and only the money standing on a step pays that step's rate. The first $18,200 pays nothing, the next chunk pays 16%, and so on up.
Earn $46,000 and you don't pay 30% on everything. You pay 0% on the first $18,200, 16% on the next $26,800, and 30% on just the last $1,000 — the only bit on the 30% step.
That's why a pay rise can never leave you worse off. Only the new dollars get the higher rate; everything underneath keeps its cheaper rates.
💡Reality check
"I don't want a raise, it'll push me into the next bracket" is a myth that costs real money. Only the raise gets the higher rate — you always come out ahead.
Watching $80,000 climb the stairs
Say you earn $80,000 in 2025-26. Here's your money, step by step:
- First $18,200 at 0% = $0
- $18,201 to $45,000 ($26,800) at 16% = $4,288
- $45,001 to $80,000 ($35,000) at 30% = $10,500
- Income tax total = $14,788
- Medicare levy (a 2% charge that helps pay for public healthcare) on $80,000 = $1,600
- Total tax = $16,388, leaving take-home pay of about $63,612
The 2% that hides in plain sight
On top of income tax, most Australians pay the Medicare levy — 2% of your entire taxable income, not just the bit above some line. On $80,000 that's an extra $1,600 a year.
Low income earners pay a smaller levy or none at all. Higher earners without private hospital cover can also cop the Medicare levy surcharge — an extra charge stacked on top.
When a website quotes your "tax", check whether the levy is included. Ours includes it — the number you see is what actually leaves your pay.
Why your real rate is friendlier than you think
On $80,000, your marginal rate (the tax rate on the last dollar you earn) is 30%. But your effective rate — your average rate across everything you earn — is only about 20.5% including the Medicare levy, because the tax-free threshold and the 16% step drag your average down.
The gap matters when weighing up overtime, a second job, or salary sacrificing (paying for things like extra super straight out of your pre-tax pay). Extra income is taxed at your marginal rate — and every deduction saves you tax at that same rate.
Want your own number? Put your salary into the calculator and get the full breakdown in seconds.
⚡Quick win
Deductions save tax at the rate on your last dollar. On $80,000, every $100 you legitimately claim puts $32 back in your pocket — 30% tax plus 2% levy.
FAQ
If I move into a higher tax bracket, is all my income taxed more?
No. Only the income above the bracket line pays the higher rate. Everything below keeps its lower rates, so a pay rise always leaves you with more in hand.
How much tax do I pay on $80,000 in 2025-26?
Roughly $14,788 in income tax plus $1,600 Medicare levy — about $16,388 all up. That leaves take-home pay of around $63,612 before any deductions or offsets (little tax discounts).
Is the Medicare levy included in the tax brackets?
No, it's a separate 2% of your whole taxable income on top of income tax. Low income earners pay a smaller levy or skip it altogether.
Run your own numbers
Sources: figures checked against ATO published rates and thresholds for FY2025-26 at the review date. See how we check our numbers.
⚠️ General information only — not tax or financial advice. Figures relate to FY2025-26 unless stated otherwise.