2017 Income Tax Rates
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2023 Tax Tables

The income tax rates for the 2022-2023 financial year (which runs from 1 July 2022 to 30 June 2023) are as follows:

  • Taxable income up to $18,200: 0% tax
  • Taxable income between $18,201 and $45,000: 19% tax on the amount over $18,200
  • Taxable income between $45,001 and $120,000: $5,092 plus 32.5% tax on the amount over $45,000
  • Taxable income between $120,001 and $180,000: $29,467 plus 37% tax on the amount over $120,000
  • Taxable income over $180,000: $51,667 plus 45% tax on the amount over $180,000

Note that these rates do not include the Medicare Levy, which is an additional 2% tax on most taxpayers’ income that helps fund Australia’s public health system. There is also a Medicare Levy Surcharge for those who do not have private hospital insurance.

If I jump into the next bracket, do I pay that rate from dollar 1?

No, if you move into a higher tax bracket, you will only pay the higher tax rate on the income that falls within that bracket. The portion of your income that falls into the lower tax bracket(s) will still be taxed at the lower rate(s).

For example, let’s say you earn $50,000 per year. Under the 2021-2022 income tax rates in Australia, you would pay 19% tax on the portion of your income between $18,201 and $45,000, and 32.5% tax on the portion of your income between $45,001 and $50,000. So your total tax liability would be:

  • 0% on the first $18,200 of income
  • 19% on the next $26,799 of income ($45,000 minus $18,201)
  • 32.5% on the remaining $4,999 of income ($50,000 minus $45,001)

Therefore, you would pay a total of $8,547.95 in tax for the year.

If your income increased to $60,000 per year, you would still pay 0% on the first $18,200 of income, 19% on the next $26,799 of income, and 32.5% on the portion of your income between $45,001 and $60,000. So your total tax liability would be:

  • 0% on the first $18,200 of income
  • 19% on the next $26,799 of income ($45,000 minus $18,201)
  • 32.5% on the next $14,999 of income ($60,000 minus $45,001)

Therefore, you would pay a total of $11,547.95 in tax for the year.

Is it better to earn more and pay extra tax?

Whether earning more and paying extra tax is better depends on your financial goals, expenses, marginal tax rate, and other financial obligations. If your goal is to maximize income and accumulate wealth, earning more and paying more tax may be better. However, if you value work-life balance or other non-financial goals, a lower income and lower tax liability may be preferable.

Earning more can increase your standard of living and allow you to cover expenses more comfortably, but it can also mean a higher marginal tax rate on additional income, reducing its overall value. Other financial obligations, such as debt repayment or saving for retirement, should also be considered.

Ultimately, the decision to earn more and pay extra tax depends on your individual circumstances, priorities, and financial goals. It’s important to weigh the pros and cons and seek professional advice before making any significant financial decisions.

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9 Comments

  1. Hi, thanks for the info. The rate of tax for people earning over $180 seems to rise sharply. I am on a salary of $162000 but with some overtime will come close to $180k however I salary sacrifice my super. I gather I should avoid going over the $180k threshold

  2. Hi, I work for an agency and have 5 separate tax statements. I have been paid $44,500 (gross) and my taxable income was $5058. I am also a part-time student. I think I haven’t paid enough tax, does this mean I now owe money this financial year?
    Kind Regards, Trish.

    1. Trish, Unfortunately your thoughts are correct, the tax is $6,900 and medicare levy is $667 on $44,500 totaling $7567.
      These amounts don’t include any tax deductions, but for every $100 spent on deductions the amount is reduced by $31.50.
      Also, if you have an amount to pay, the ATO will let you make arrangements over 24 months to pay off any debts.

  3. Hi, I am on $48k gross and have an investment property for which i’ll pay over $11,000.00 in interest before EOFY- does this mean a better tax return for me? thankyou

    edit: i should include i’d have recieved $9704 in rental income by EOFY- thanks a lot, Dan

    1. For income greater than 37k and less than 80k the tax rate is 30% plus 1.5% Medicare levy. Based on 9.7k in rent less the 11k in interest and say 3k in expenses such as water and council rates, management fees.
      The property would have a loss of $4,300, at 31.5% it will save you $1,354.50 in tax. This is not to be confused with your tax refund/payable which would be a completely different calculation

  4. Hi
    I’m reaching 180k threshold. If I slow down (i.e. not exceeding 180k for this FY), am I better off?. Ta

    1. The tax rate for the amounts over 180k for the financial year ending 30th June 2011 is 45%.
      SO for every $1,000 earned over $180k, $450 will be tax and $550 will be yours.
      I can not answer whether you are better off or not, as work is only part of a persons life.

  5. how much comes if i earn $1035 every week. i think i am paying over tax’
    thanks
    ELius

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