Australian tax rates without the tax-free threshold are the same resident bracket rates that apply to everyone else at year-end; the difference is that tax comes out of the first dollar you earn from that job, not just the dollars above $18,200. For the 2025-26 income year, an Australian resident pays no tax up to $18,200, then 16c on each dollar to $45,000, then $4,288 plus 30c on each dollar to $135,000, then $31,288 plus 37c to $190,000, and $51,638 plus 45c on anything above that.1Australian Taxation Office. Tax Rates – Australian Resident The 2% Medicare levy sits on top for most residents.2Australian Taxation Office. What Is the Medicare Levy Not claiming the threshold doesn’t change what you owe for the year. It changes when the tax comes out of your pay.
Why the Threshold Gets Left Off a Job
The $18,200 tax-free threshold can only be claimed from one payer at a time. If you tick “yes” on two employers’ Tax File Number declarations, each one calculates withholding as if you earn up to $18,200 tax-free with them, and neither withholds enough. The shortfall becomes a debt when you lodge.
So people on a second job normally decline the threshold there. The same logic applies if you receive a Centrelink payment and also work: the threshold usually goes on whichever payment stream is largest. Some taxpayers with significant investment income also decline the threshold on wages so their pay-cycle withholding gets closer to their real annual bill. Foreign residents and working holiday makers don’t get the threshold at all, which is a separate situation covered below.
How Withholding Changes Without the Threshold
Your employer runs your pay through a different column of the ATO’s PAYG withholding tables (Schedule 1, NAT 1004). Instead of treating the first roughly $350 per week as tax-free, the “no tax-free threshold” column starts deducting from the first dollar. At the top of the table, weekly earnings above $3,400 attract $1,111 plus 47c on each additional dollar, which builds in the top marginal rate and the Medicare levy.
The tables released on 1 July 2024 continue to apply from 1 July 2025. There is no discretion at the payroll end. Once your TFN declaration says you’re not claiming the threshold, the software applies the higher column automatically.
In practical terms, someone earning $1,000 a week at a second job has noticeably more withheld per pay than someone earning $1,000 at their only job. The gap runs roughly $55 to $60 a week at mid-range incomes. That extra is not a surcharge. It’s the tax you would owe anyway on that income once it stacks on top of your other earnings, collected as you go instead of as a bill in October.
Your annual tax is still calculated on the resident bracket schedule at the top of this article. If both employers have withheld more than the year’s actual liability, the ATO refunds the difference after you lodge.
When the Threshold Isn’t Available at All
Two groups can’t claim the threshold on any job, so the “no threshold” schedule isn’t a choice for them.
Foreign Residents
Individuals who don’t meet Australia’s tax residency tests pay a separate schedule with no tax-free amount. Every dollar of Australian-sourced income is taxed from the start. For 2025-26:
- $0 to $135,000: 30c for each dollar
- $135,001 to $190,000: $40,500 plus 37c for each dollar over $135,000
- $190,001 and above: $60,850 plus 45c for each dollar over $190,000
These brackets changed from 1 July 2024, when the previous 32.5c rate on the first $120,000 was replaced by 30c on the first $135,000.3Australian Taxation Office. Tax Rates – Foreign Resident Foreign residents can claim a full exemption from the 2% Medicare levy because they generally can’t access the public system.4Australian Taxation Office. Foreign Residents Medicare Levy Exemption The gap is still substantial: a resident on $50,000 pays around $6,788 in tax after the threshold benefit; a foreign resident on the same $50,000 pays $15,000 flat.
Tax residency is a legal test separate from immigration status. A temporary visa doesn’t automatically make you a foreign resident, and permanent residency doesn’t automatically make you a tax resident. If your employer treats you as a resident when you aren’t, you’ll be badly under-withheld.
Working Holiday Makers
Visitors on subclass 417 or 462 visas are taxed under their own schedule. There’s no tax-free threshold; the first $45,000 is taxed at a flat 15c per dollar, and above $45,000 the foreign resident brackets take over.5Australian Taxation Office. Tax Rates – Working Holiday Maker
The 15% rate only applies when the employer is registered with the ATO as a working holiday maker employer. If they aren’t registered, withholding defaults to the foreign resident schedule at 30c from the first dollar, which is double.6Australian Taxation Office. Working Holiday Makers Confirm registration before you start; overpaid amounts are refundable at tax time but only after months of waiting.
What Else Comes Out of That Pay
The bracket rates are only part of what a “no threshold” pay slip looks like. Two other items typically stack on top.
The 2% Medicare levy applies to most residents on total taxable income, regardless of how many jobs you hold or where you claimed the threshold.2Australian Taxation Office. What Is the Medicare Levy Higher earners without private hospital cover also pay the Medicare Levy Surcharge. For 2025-26 the surcharge doesn’t apply to singles earning $101,000 or less, or families earning $202,000 or less. Above those thresholds it runs 1% to 1.5%, reaching the full 1.5% for singles over $158,000 or families over $316,000.
Study loan repayments hit through the same withholding system. HELP, HECS-HELP, and other government study loans trigger a compulsory repayment once repayment income exceeds $67,000 for 2025-26:
- $67,001 to $125,000: 15c for each dollar over $67,000
- $125,001 to $179,285: $8,700 plus 17c for each dollar over $125,000
- $179,286 and above: 10% of total repayment income
These repayments are separate from income tax and the levy, but they’re collected through PAYG.7Australian Taxation Office. Study and Training Loan Repayment Thresholds and Rates When you tick the study loan box on your TFN declaration, your employer withholds extra to cover the expected repayment. On a second job with no threshold and a study loan, the total deduction can feel steep. It’s prepaying real obligations, not overtaxation.
Changing Which Employer Gets the Threshold
The election lives on the Tax File Number declaration (NAT 3092). Question 9 asks whether you want to claim the threshold from that payer.8Australian Taxation Office. NAT 3092 – Tax File Number Declaration The form goes to your employer’s payroll team. Many workplaces run this through digital onboarding, and the change applies as soon as it’s saved. Paper forms usually flow through within a pay cycle or two.
You can review your current TFN declaration details through ATO online services via myGov, but the actual switch has to go through the employer.9Australian Taxation Office. Tax File Number Declaration Claim the threshold from whichever payer gives you the highest regular income. If your circumstances change — say a former second job becomes your main income — submit a new declaration to move the threshold across. Updates only affect future pay, not past withholding.
If the “no threshold” column still over-collects because you have large deductible expenses, you can apply for a PAYG withholding variation. Applications for the current financial year must be in by 30 April; anything lodged in May or June rolls into the next year starting 1 July.10Australian Taxation Office. PAYG Withholding Variation Application The ATO won’t approve a variation if you have outstanding tax debts or unfiled returns.
What Happens If You Get the Election Wrong
Claiming the threshold from two employers at once is the most common mistake, and the ATO catches it through payroll reporting. Both employers assume $18,200 is tax-free on their end, so both under-withhold. On a combined income of $80,000, the shortfall can easily top $2,500 at lodgement.
Unpaid tax carries the ATO’s general interest charge, sitting at roughly 10.65% to 10.96% annually for 2025-26 and compounding daily.11Australian Taxation Office. General Interest Charge (GIC) Rates Reckless or intentional misstatements on a TFN declaration can also attract administrative penalties.
The reverse mistake — declining the threshold from every employer when you’re entitled to it — means over-withholding all year. The money comes back as a refund after you lodge, but until then it’s an interest-free loan to the government. If cash flow matters, make sure the threshold is claimed from your primary payer, and left off any second job.