ATO HELP/HECS Repayment Thresholds and Rates for 2026
Have you studied at university or taken out a government study or training loan? If so, you may have a HELP/HECS debt.
For the 2026 financial year, there have been major changes to how compulsory HELP repayments are calculated. The repayment threshold has increased, and the old system of applying a repayment percentage to your total repayment income has been replaced with a marginal repayment system.
Notifying Your Employer
You are required to let your employer know if you have a HELP, HECS or other study and training support loan. This is usually done when you complete your Tax File Number declaration or by lodging a withholding declaration if your circumstances change later.
Your employer will withhold extra tax during the year to help cover your compulsory repayment when your tax return is lodged. For the 2025–26 financial year, compulsory repayments start once your repayment income exceeds $67,000, which is roughly equivalent to wages of more than $1,288 per week. The ATO confirms the minimum repayment income for 2025–26 is $67,000.
ATO HELP/HECS Repayment Thresholds and Rates
At the end of the financial year, when your tax return is completed, the ATO calculates how much compulsory HELP repayment is payable based on your repayment income.
Repayment income is not always the same as taxable income. It generally includes your taxable income plus items such as total net investment losses, reportable fringe benefits, reportable superannuation contributions and exempt foreign employment income.
From the 2025–26 income year, compulsory repayments are calculated using a marginal repayment system. This means repayments are generally calculated only on the income above the new $67,000 threshold, rather than applying a percentage to your full repayment income as occurred under the old system.
| Repayment Income | Repayment Amount |
|---|---|
| $0 – $67,000 | Nil |
| $67,001 – $125,000 | 15c for each $1 over $67,000 |
| $125,001 – $179,285 | $8,700 plus 17c for each $1 over $125,000 |
| $179,286 and over | 10% of total repayment income |
The ATO’s published 2025–26 thresholds show the same repayment bands, including the $67,000 threshold and the $179,286 point where the 10% repayment cap applies.
Example of How the Payment Works
For example, if your repayment income is $75,000, your compulsory repayment is calculated only on the amount above $67,000.
$75,000 minus $67,000 equals $8,000.
15% of $8,000 is $1,200.
So, if your repayment income is $75,000 for the 2025–26 year, your compulsory HELP repayment would be $1,200.
As another example, if your repayment income is $100,000, the repayment would be calculated as:
$100,000 minus $67,000 equals $33,000.
15% of $33,000 is $4,950.
This is a significant change from the previous system, where the repayment rate was applied to your total repayment income.
How This Compares to the Previous Year
The 2025–26 calculation is more favourable for many people because the repayment is now calculated on a marginal basis.
Under the old 2024–25 system, once your repayment income reached the relevant threshold, the repayment percentage applied to your total repayment income. Under the 2025–26 system, the first $67,000 is effectively ignored for repayment purposes, and the repayment is calculated only on the income above that amount.
For example:
| Repayment Income | 2024–25 Calculation | 2025–26 Calculation | Reduction |
|---|---|---|---|
| $60,000 | 1% × $60,000 = $600 | Nil | $600 |
| $75,000 | 3.5% × $75,000 = $2,625 | 15% × $8,000 = $1,200 | $1,425 |
| $100,000 | 5.5% × $100,000 = $5,500 | 15% × $33,000 = $4,950 | $550 |
So, using the $75,000 example, the compulsory repayment reduces from $2,625 under the 2024–25 rules to $1,200 under the 2025–26 rules.
This is why the 2026 financial year changes are significant. For many taxpayers with HELP/HECS debts, the compulsory repayment will be lower than it would have been under the previous system, particularly for those earning between the old threshold and the new $67,000 threshold.
Reportable Fringe Benefits
If you receive reportable fringe benefits, salary packaging or have a novated lease, you need to be careful. These amounts may not be included in your taxable income, but they can still increase your repayment income for HELP/HECS purposes.
In some cases, it may be worth asking your pay office to withhold extra PAYG withholding during the year to avoid a tax bill when your return is lodged.
Clients often ask whether salary sacrificing is still worthwhile if it increases their HELP repayment. In many cases, the tax savings from salary packaging can still outweigh the extra compulsory HELP repayment, but it depends on your income level, the type of benefit and your overall tax position.
Living Overseas
If you live or work overseas and have a HELP, HECS or other study and training support loan, you may still have repayment obligations in Australia.
If you intend to live overseas for 183 days or more in any 12-month period, the ATO requires you to update your contact details and submit an overseas travel notification. You may also need to report your worldwide income so the ATO can calculate whether a compulsory overseas repayment is required.
Deceased Estate
If a person dies with a HELP or HECS debt, the trustee or executor may need to lodge outstanding tax returns up to the date of death.
Any compulsory repayment included on a notice of assessment for the period before death must be paid by the estate. After this, the remaining HELP debt is cancelled. The deceased person’s family and the trustee are not required to pay the rest of the loan personally.
Loan Indexation Rate
HELP and other study loans are indexed each year on 1 June. Indexation is not charged like normal interest, but it increases the balance of the loan to keep pace with inflation and wages.
For 1 June 2026, the indexation rate is 2.8%. The ATO also lists the 2025 indexation rate as 3.2%, while the 2024 and 2023 rates were retrospectively reduced to 4.0% and 3.2% respectively under the new indexation cap rules.
The indexation rules were changed so that HELP indexation is based on the lower of the Consumer Price Index or Wage Price Index, with effect from 1 June 2023.
20% Student Loan Debt Reduction
A further major change for 2025–26 was the one-off 20% reduction to eligible student loan debts.
The Australian Government’s legislation to reduce student loan debt by 20% passed Parliament in July 2025, and the Department of Education states that the ATO has completed processing the reductions. The reduction applied to eligible student loan balances as at 1 June 2025.
This reduction applied to a range of study and training loans, including HELP loans such as HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP and OS-HELP, as well as VET Student Loans and some other student support loans.
Final Thoughts
The 2026 financial year is a significant year for HELP/HECS borrowers. The repayment threshold has increased to $67,000, repayments are now calculated using a marginal system, and many borrowers also received a one-off 20% reduction to their student loan balance.
The key point is that HELP repayments are based on repayment income, not just taxable income. Reportable fringe benefits, investment losses and salary sacrifice arrangements can all affect the final calculation.
If you have a HELP/HECS debt, it is important to make sure your employer is withholding correctly and to check your repayment position before the end of the financial year.
