Learn how Australian income tax works, including the latest tax brackets, Medicare levy, and how to calculate your take-home pay.
How Australian Income Tax Works
Australia uses a progressive tax system, which means you pay different rates of tax on different portions of your income. The more you earn, the higher your marginal tax rate.
2024-25 Tax Brackets
| Income Range | Tax Rate | Tax on This Income |
|-------------|----------|-------------------|
| $0 - $18,200 | 0% | Nil |
| $18,201 - $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 - $135,000 | 30% | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 - $190,000 | 37% | $31,288 plus 37c for each $1 over $135,000 |
| $190,001+ | 45% | $51,638 plus 45c for each $1 over $190,000 |
Medicare Levy
On top of income tax, most Australians pay the Medicare levy of 2% of their taxable income. This helps fund Australia's public healthcare system.
Example Calculation
Let's say you earn $80,000 per year:
First $18,200 = $0 tax$18,201 to $45,000 = $26,800 × 16% = $4,288$45,001 to $80,000 = $35,000 × 30% = $10,500Total Income Tax = $14,788Medicare Levy = $80,000 × 2% = $1,600Total Tax = $16,388Take-Home Pay = $63,612 ($1,223/week)Tips to Reduce Your Tax
Claim all deductions - Work-related expenses, home office costs, and professional developmentSalary sacrifice into super - Reduce your taxable income while boosting retirement savingsConsider income protection insurance - Premiums are tax-deductibleTime your income - Defer bonuses to the next financial year if possible