Australian Tax Brackets: Resident, Foreign, and Working Holiday Rates

For the 2025–26 financial year, the Australian tax brackets for residents start with a tax-free threshold of $18,200 and then step through four marginal rates: 16 percent, 30 percent, 37 percent, and 45 percent. The top rate applies to income above $190,000. Foreign residents and working holiday makers sit on separate schedules, and the Medicare levy adds 2 percent on top for most residents.

Resident Tax Rates for 2025–26

If you meet the ATO’s residency tests (the primary one being the “resides test”), the following rates apply to income earned between 1 July 2025 and 30 June 2026.1Australian Taxation Office. Your Tax Residency2Australian Taxation Office. Tax Rates – Australian Resident

  • $0 to $18,200: no tax.
  • $18,201 to $45,000: 16 cents for each dollar over $18,200.
  • $45,001 to $135,000: $4,288 plus 30 cents for each dollar over $45,000.
  • $135,001 to $190,000: $31,288 plus 37 cents for each dollar over $135,000.
  • $190,001 and over: $51,638 plus 45 cents for each dollar over $190,000.

These are the same brackets that took effect on 1 July 2024, when the restructure widened the 16 percent and 30 percent tiers and removed the old 32.5 percent band. Nothing has moved for 2025–26.

How the Brackets Actually Apply to Your Income

The rates are marginal, so each bracket only applies to the income falling inside it. A raise into a higher bracket does not lift your earlier earnings up to the new rate.

Consider a resident earning $90,000. The first $18,200 is tax-free. The next $26,800 (from $18,201 to $45,000) is taxed at 16 percent, giving $4,288. The remaining $45,000 (from $45,001 to $90,000) is taxed at 30 percent, adding $13,500. Income tax before the Medicare levy comes to $17,788.2Australian Taxation Office. Tax Rates – Australian Resident That’s an effective rate near 19.8 percent even though the marginal rate on the last dollar earned is 30 percent.

Two numbers matter here for different reasons. Your marginal rate tells you what the ATO keeps from a bonus, overtime shift, or side income. Your effective rate is the overall share of your income going to tax.

Foreign Resident Rates

If you fail every ATO residency test, you’re taxed as a foreign resident. There is no tax-free threshold, so tax starts on the first dollar of Australian-sourced income.3Australian Taxation Office. Tax Rates – Foreign Resident

  • $0 to $135,000: 30 cents for each dollar.
  • $135,001 to $190,000: $40,500 plus 37 cents for each dollar over $135,000.
  • $190,001 and over: $60,850 plus 45 cents for each dollar over $190,000.

Foreign residents generally owe Australian tax only on income sourced here: wages for work performed in Australia, rent from Australian property, capital gains on Australian real estate, and business income from an Australian operation. Dividends and interest from Australian sources are usually handled through separate withholding rates rather than these brackets. Foreign residents are exempt from the Medicare levy and can’t claim the Low Income Tax Offset.4Australian Taxation Office. Medicare Levy Exemption

Working Holiday Maker Rates

Visitors on a subclass 417 or 462 visa fall under a third schedule. A flat 15 percent applies to the first $45,000, provided the employer is registered with the ATO as a working holiday maker employer.5Australian Taxation Office. Working Holiday Makers Above that, the rates line up with the standard resident brackets:

  • $0 to $45,000: 15 percent.
  • $45,001 to $135,000: 30 percent.
  • $135,001 to $190,000: 37 percent.
  • $190,001 and over: 45 percent.

If your only income for the year was working holiday wages and your total taxable income stayed under $45,001, you don’t need to lodge a return.5Australian Taxation Office. Working Holiday Makers

The Medicare Levy on Top

Most residents pay an additional 2 percent Medicare levy on their taxable income.6Australian Taxation Office. What Is the Medicare Levy For someone earning $90,000, that’s another $1,800 added to the income tax bill. The levy is collected through your annual assessment alongside income tax.

The levy is reduced or waived at lower income levels. For 2025–26, singles earning below roughly $27,222 and families below approximately $45,907 pay a reduced amount or nothing at all, with higher thresholds for seniors and pensioners. The reduction phases in gradually rather than switching on at a single cutoff.

Medicare Levy Surcharge

Higher earners without private hospital cover pay an extra surcharge on top of the levy. The 2025–26 tiers are:7Australian Taxation Office. Medicare Levy Surcharge Income, Thresholds and Rates

  • $101,000 or less (singles) / $202,000 or less (families): no surcharge.
  • $101,001 to $118,000 (singles) / $202,001 to $236,000 (families): 1 percent.
  • $118,001 to $158,000 (singles) / $236,001 to $316,000 (families): 1.25 percent.
  • $158,001 and over (singles) / $316,001 and over (families): 1.5 percent.

Income for surcharge purposes goes beyond taxable income. It includes reportable fringe benefits, net investment losses, and reportable super contributions, and if you have a spouse the household total is used. The family threshold rises by $1,500 for each dependent child after the first.

Part-Year Residents

If you arrived in or left Australia during the year, the tax-free threshold is prorated instead of lost. You get a guaranteed base of $13,464, plus a share of the remaining $4,736 based on the number of months you were a resident.8Australian Taxation Office. Part-Year Tax-Free Threshold Someone who became a resident on 1 January would receive the $13,464 base plus six months of the remainder ($4,736 ÷ 12 × 6 = $2,368), for a prorated threshold of $15,832. Income above that is taxed at the ordinary resident rates.

Offsets That Reduce What You Owe

Offsets cut your tax bill directly rather than reducing the income the brackets apply to.

Low Income Tax Offset

The LITO gives residents with taxable income of $37,500 or less a $700 offset, phasing out in two stages:9Australian Taxation Office. Low Income Tax Offset

  • $37,500 or less: full $700.
  • $37,501 to $45,000: $700 minus 5 cents for each dollar over $37,500.
  • $45,001 to $66,667: $325 minus 1.5 cents for each dollar over $45,000.

The LITO is non-refundable, so it can wipe out your tax to zero but any unused portion isn’t paid out. It’s applied automatically when the ATO processes your return.

Seniors and Pensioners Tax Offset

SAPTO is available to residents who have reached Age Pension age and qualify for a government pension or allowance, whether or not they actually receive one. The maximum offset is $2,040 for those living apart due to illness and $1,602 for couples living together.10Australian Taxation Office. T1 Seniors and Pensioners Tax Offset 2025 Combined with the tax-free threshold, an eligible senior can earn over $30,000 before any income tax is owed.