How is income tax calculated in Australia?
Australian income tax is calculated using a progressive bracket system. For FY2024–25, you pay 0% on the first $18,200, then 16% up to $45,000, 30% up to $135,000, 37% up to $190,000, and 45% on everything above that. Most residents also receive the Low Income Tax Offset (LITO), which further reduces the amount of tax owed.
What is the Medicare levy?
The Medicare levy is an additional 2% tax on your taxable income that funds Australia's public healthcare system. It applies to most residents earning above $27,222 per year in FY2024–25. Some people are exempt — for example, those on very low incomes or with certain medical conditions.
What is the tax-free threshold in 2024–25?
The tax-free threshold is $18,200. Australian residents pay no income tax on the first $18,200 they earn in a financial year. You should claim this with your employer on your Tax File Number (TFN) Declaration form. If you don't claim it, your employer will withhold tax at a higher rate.
What is the Low Income Tax Offset (LITO)?
The LITO is a tax reduction for Australian residents earning under $66,667 per year. The maximum offset is $700 for incomes up to $37,500. It phases out gradually to zero at $66,667. It reduces your tax bill but isn't a cash refund — it simply means you owe less tax.
What changed with the Stage 3 tax cuts?
The Stage 3 tax cuts took effect on 1 July 2024. The key changes were: the 19% rate dropped to 16%, the 32.5% rate dropped to 30% and now covers income up to $135,000 (was $120,000), and the top 45% rate now starts at $190,000 (was $180,000). The result is most Australian workers received a meaningful tax cut in FY2024–25.
How much tax do I pay on $80,000 in Australia?
On an $80,000 annual salary in FY2024–25, a resident would pay approximately $16,288 in income tax. After the LITO (which phases out at higher incomes), plus $1,600 in Medicare levy, total deductions are roughly $17,888 — leaving a take-home pay of around $62,112 per year, or about $5,176 per month.
Does this calculator include HECS/HELP repayments?
No — HECS/HELP student loan repayments are not included in this calculator. If you have a student debt, your actual take-home will be lower. HELP repayments are calculated as a percentage of income above $54,435 (FY2024–25 threshold) and are made separately through the tax system.
What's the difference between gross and net income?
Gross income is your total salary before any deductions — the number on your employment contract. Net income (or take-home pay) is what you actually receive after income tax, the Medicare levy, and any other deductions have been subtracted. This calculator shows you both.