Australian Income Tax Rates for 2026 and 2027

Tax Tables

The income tax rates below apply to Australian resident individuals for the:

2026 financial year — 1 July 2025 to 30 June 2026
2027 financial year — 1 July 2026 to 30 June 2027

These rates apply to Australian resident individuals. Different tax rates apply to foreign residents, working holiday makers and some minors.

The tax rates below do not include the Medicare levy, Medicare levy surcharge or any tax offsets.

Resident Individual Tax Rates for 2026

The income tax rates for the 2025–26 financial year, which runs from 1 July 2025 to 30 June 2026, are as follows:

Resident Individual Tax Rates for 2027

The income tax rates for the 2026–27 financial year, which runs from 1 July 2026 to 30 June 2027, are as follows:

The main change for the 2027 financial year is that the tax rate on income between $18,201 and $45,000 reduces from 16% to 15%.

For taxpayers earning more than $45,000, this reduces the annual tax payable by up to $268 compared with the 2026 financial year, before Medicare levy and any tax offsets are considered.

Medicare Levy

The above tax tables do not include the Medicare levy.

Most Australian taxpayers also pay the Medicare levy, which is generally 2% of taxable income. This is calculated separately and added to the income tax payable.

Some taxpayers on lower incomes may pay a reduced Medicare levy or may not have to pay it at all.

There is also a Medicare levy surcharge for some higher-income taxpayers who do not have appropriate private hospital cover.

If I Move Into the Next Tax Bracket, Do I Pay That Rate From Dollar 1?

No. If you move into a higher tax bracket, you only pay the higher rate on the part of your income that falls within that bracket.

The income in the lower brackets is still taxed at the lower rates.

This is called a marginal tax rate system.

Example — 2026 Financial Year

For example, if your taxable income is $60,000 in the 2026 financial year, your income tax is calculated as follows:

This calculation does not include the Medicare levy or any tax offsets.

Example — 2027 Financial Year

If your taxable income is $60,000 in the 2027 financial year, your income tax is calculated as follows:

This calculation does not include the Medicare levy or any tax offsets.

In this example, the tax payable reduces by $268 in the 2027 financial year because the 16% tax rate has reduced to 15%.

What Happens If My Income Increases?

If your taxable income increases, you do not lose the benefit of the lower tax brackets.

For example, if your income increases from $60,000 to $70,000, only the extra $10,000 is taxed at the marginal rate that applies to that income range.

Using the 2026 financial year rates:

The extra $10,000 of income results in extra tax of $3,000, because that additional income falls within the 30% tax bracket.

You are still better off before considering other factors, because you have earned an extra $10,000 and paid $3,000 extra tax.

Is It Better to Earn More and Pay Extra Tax?

From an income tax point of view, earning more income should not make you worse off.

Australia uses a progressive tax system. This means that as your income increases, only the extra income within each bracket is taxed at the higher rate. You do not suddenly pay the higher tax rate on all of your income just because you move into the next tax bracket.

I cannot think of a normal income tax situation where earning an extra dollar of taxable income would leave you worse off purely because of income tax. You may pay more tax overall, but you should still keep part of the extra income.

However, there can be other factors outside the basic income tax rates that affect the final result, including:

Medicare levy
Medicare levy surcharge
HELP/HECS repayments
Family Tax Benefit
Child Care Subsidy
Centrelink entitlements
Private health insurance rebates
Tax offsets
Salary sacrifice arrangements

So while earning more is generally better from a tax bracket point of view, it is still worth getting advice where a change in income may affect other payments, rebates or obligations.

Final Thoughts

The 2026 and 2027 financial years use similar tax brackets, but the 2027 year includes a small tax cut.

For most taxpayers earning more than $45,000, the change from 16% to 15% on the lower tax bracket reduces tax by up to $268 for the year.

The key point to remember is that moving into a higher tax bracket does not mean all your income is taxed at the higher rate. Only the income within that bracket is taxed at that rate.

The tax tables above are a useful guide, but your final tax position may also be affected by the Medicare levy, tax offsets, deductions, HELP/HECS repayments and other personal circumstances.