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Australian Income Tax 2025–26: Rates, Offsets and What Changed
The 2025–26 financial year sees the continued effect of the Stage 3 tax cuts that took effect from 1 July 2024. These cuts significantly reduced the 32.5% bracket and raised the threshold for the 37% rate, delivering meaningful tax relief to most Australian workers earning between $45,000 and $200,000.
2025–26 Tax Brackets
| Taxable Income | Tax Rate | Tax on This Bracket |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 19% | 19c per $1 over $18,200 |
| $45,001 – $135,000 | 32.5% | $5,092 + 32.5c per $1 over $45,000 |
| $135,001 – $190,000 | 37% | $34,342 + 37c per $1 over $135,000 |
| Over $190,000 | 45% | $54,892 + 45c per $1 over $190,000 |
Key Offsets 2025–26
| Offset | Maximum Value | Who Gets It |
|---|---|---|
| Low Income Tax Offset (LITO) | $700 | Incomes under $66,667 |
| Low Income Medicare Levy Reduction | Full exemption | Income under $26,000 (approx) |
| Seniors & Pensioners Tax Offset (SAPTO) | Up to $2,230 | Eligible seniors on pension |
Medicare Levy Surcharge (MLS)
Australians earning above $93,000 (singles) or $186,000 (families) who do not hold hospital-level private health insurance pay an additional 1–1.5% Medicare Levy Surcharge. Taking out a compliant hospital policy eliminates this surcharge and is often cheaper than paying it.
Based on ATO 2025–26 rates. Individual tax outcomes may vary. Not tax advice — consult a registered tax agent for your specific situation.