Australian Income Tax Rates 2026-27: New 15% Bracket, Tax Calculator & Take-Home Pay

Direct answer: From 1 July 2026, the 16% bracket drops to 15%, cutting tax for every Australian earning above $18,200. A worker on $90,000 saves about $400 compared to the prior year. The rate falls again to 14% on 1 July 2027. Combined with the Medicare Levy of 2%, most employees can now estimate their take-home pay confidently using the new 2026-27 thresholds.

Data note: The figures in this article are sourced from Australian Taxation Office (ATO) published rates as at July 2026 and reflect the legislated Stage 3 tax cuts as amended. The 2026-27 income year runs from 1 July 2026 to 30 June 2027. The 15% rate applies from 1 July 2026 and falls to 14% from 1 July 2027. Rates apply to taxable income — gross income minus allowable deductions. All dollar amounts are in Australian dollars.

The 2026-27 resident tax brackets at a glance

The legislated schedule for Australian residents for the income year ending 30 June 2027 is:

1. $0 to $18,200 · Nil (tax-free threshold)
2. $18,201 to $45,000 · 15 cents for each dollar over $18,200 (down from 16% in 2025-26)
3. $45,001 to $135,000 · $4,020 plus 30 cents for each dollar over $45,000
4. $135,001 to $190,000 · $31,020 plus 37 cents for each dollar over $135,000
5. $190,001 and above · $51,370 plus 45 cents for each dollar over $190,000

These rates are marginal — you pay the stated rate only on the income inside each bracket, not on your total taxable income. The tax-free threshold means the first $18,200 of taxable income attracts no tax. The effective tax rate (total tax divided by total income) is therefore lower than the top marginal rate for every taxpayer whose income crosses more than one bracket.

The headline change for 2026-27 is the drop from 16% to 15% in the second bracket. This is now law: Parliament passed the amendment and the ATO has confirmed the new withholding schedules. The cut is the second step in a two-stage reduction — the rate falls again to 14% from 1 July 2027.

What the 2026 rate cut means in dollars

To show the practical effect of the 15% rate, here is the tax payable at four sample taxable incomes before the Medicare Levy:

For a taxable income of $50,000: The tax is $4,020 on the first $45,000, plus 30% of the $5,000 above $45,000. That gives $4,020 + $1,500 = $5,520. Under the old 16% rate the figure was roughly $5,700 — the saving is about $180.

For a taxable income of $90,000: The tax is $4,020 on the first $45,000, plus 30% of the $45,000 above that. That gives $4,020 + $13,500 = $17,520. Under the old 16% rate the saving is about $400.

For a taxable income of $150,000: The tax is $31,020 on the first $135,000, plus 37% of the $15,000 above $135,000. That gives $31,020 + $5,550 = $36,570. Under the old 16% rate the saving is about $400.

For a taxable income of $250,000: The tax is $51,370 on the first $190,000, plus 45% of the $60,000 above $190,000. That gives $51,370 + $27,000 = $78,370. Under the old 16% rate the saving is about $400.

The saving is the same dollar amount — roughly $400 — for anyone earning above $45,000, because the entire second bracket benefit (1% of the $26,800 band from $18,200 to $45,000) is fully captured once income exceeds $45,000. The 2027 drop to 14% will deliver another ~$400 saving on the same logic.

Medicare Levy: add 2% on top

Every resident taxpayer with taxable income above the relevant threshold also pays the Medicare Levy at 2% of taxable income. There is no separate Medicare Levy calculation for these sample incomes beyond applying 2% to the full taxable income. For a $90,000 income the Medicare Levy is $1,800, bringing total tax plus levy to roughly $19,320 for 2026-27.

Lower-income earners may receive a Medicare Levy reduction or exemption depending on their circumstances. The ATO publishes the reduction thresholds annually. The Medicare Levy Surcharge (MLS) is an additional levy that applies to higher-income earners who do not hold an eligible level of private hospital cover — that is a separate topic covered in our dedicated MLS article.

Take-home pay in 2026-27: a practical view

For a PAYG employee on a $90,000 salary with no other deductions, the approximate monthly take-home after tax and Medicare Levy is:

1. Gross monthly salary · $7,500
2. Monthly income tax (17,520 ÷ 12) · $1,460
3. Monthly Medicare Levy (1,800 ÷ 12) · $150
4. Approximate monthly take-home · $5,890

This does not include HECS/HELP repayments, which are withheld separately by employers and are now calculated under the marginal repayment system introduced from 2025-26. If you have a study loan, your take-home figure will be lower.

Use the Arrivau income tax calculator to model your own income scenario including salary sacrifice, deductions, HECS repayments and the Medicare Levy. The calculator applies the current 2026-27 rates and can show the difference the 2027 14% rate will make.

Non-resident and working holiday maker rates

For context, Australia applies different tax schedules to foreign residents and working holiday makers.

Foreign residents pay tax from the first dollar with no tax-free threshold. Their 2026-27 rates are:

1. $0 to $135,000 · 30 cents in the dollar
2. $135,001 to $190,000 · $40,500 plus 37 cents for each dollar over $135,000
3. $190,001 and above · $60,850 plus 45 cents for each dollar over $190,000

Foreign residents do not pay the Medicare Levy.

Working holiday makers on visa subclasses 417 or 462 have their own schedule:

1. $0 to $45,000 · 15 cents in the dollar
2. $45,001 to $135,000 · $6,750 plus 30 cents for each dollar over $45,000
3. $135,001 to $190,000 · $33,750 plus 37 cents for each dollar over $135,000
4. $190,001 and above · $54,100 plus 45 cents for each dollar over $190,000

These rates are relevant for anyone arriving in Australia on a working visa or an employer sponsoring foreign workers. The residency test is a separate question under ATO rules and depends on factors including days in Australia, family ties and intention to reside.

How the 2027 14% rate changes the picture

From 1 July 2027, the rate on income between $18,201 and $45,000 falls from 15% to 14%. The tax payable on the second bracket drops from $4,020 to $3,752 — a saving of $268 per year for anyone earning at least $45,000. Combined with the 2026 cut from 16% to 15%, the total per-person benefit of the two-stage reduction is roughly $668 per year compared with the pre-2026 baseline of a 16% rate on that band.

The remaining brackets ($45,001 to $135,000 at 30%, $135,001 to $190,000 at 37%, and $190,001+ at 45%) are not scheduled for further change in the 2027-28 income year under current legislation.

Planning your tax and borrowing in 2026-27

Income tax rates are one half of the household financial picture. For anyone assessing whether to buy a home, refinance or invest, the other half is borrowing power. The APRA serviceability buffer of 3 percentage points and the DTI cap introduced in February 2026 both constrain how much you can borrow, which we explain in our dedicated borrowing-power article. Your after-tax income is the starting point for any serviceability calculation, which is why understanding the 2026-27 rate schedule is useful even if you are not lodging a return until July 2027.

Internal links for the next decision

• Income tax calculator — model your take-home pay for 2026-27
• Borrowing power calculator — see how your after-tax income translates to loan capacity
• HELP/HECS repayment 2026-27 — understand the marginal repayment system
• Medicare Levy & MLS surcharge 2026 — check whether you are paying extra
• All calculators and tools

Information sources

This article draws on published rates and guidance from the Australian Taxation Office (ATO) as at July 2026, including the legislated personal income tax rate schedule for the 2026-27 income year, the Medicare Levy Act 1986, and the non-resident and working holiday maker withholding schedules. The 2027 14% rate is confirmed in the amending legislation and reflected in the government's forward estimates.

FAQ

Do I pay 15% on my entire income?

No. Australia uses marginal tax rates. The first $18,200 is tax free. The 15% rate applies only to income between $18,201 and $45,000. The 30% rate applies only to income between $45,001 and $135,000, and so on. Your effective (average) tax rate is lower than your top marginal rate.

When does the 14% rate start?

The 14% rate applies from 1 July 2027 — the 2027-28 income year. The 2026-27 year uses the 15% rate on income from $18,201 to $45,000.

How much will I save in 2026-27 compared with 2025-26?

If your taxable income is at least $45,000, you will save about $400 in tax for the full year compared with the old 16% rate. If your income is below $45,000, the saving is smaller and depends on how much of the second bracket your income falls into.

Does the Medicare Levy apply to everyone?

Most Australian residents pay the Medicare Levy at 2% of taxable income. Lower-income earners may qualify for a reduction or exemption. Foreign residents and some categories of temporary visa holders do not pay the Medicare Levy.

Can I use the tax calculator for HECS and MLS estimates?

Yes. The Arrivau income tax calculator at /calculators/income-tax/ models income tax, Medicare Levy, MLS surcharge and HELP/HECS repayments in one pass, using the current 2026-27 rates and thresholds.

General information disclaimer

This article is general information only and is not personal financial, tax, legal or credit advice. Rates, thresholds and policies can change without notice. Arrivau Pty Ltd (ABN 81 643 901 599) provides credit assistance as an ASIC Credit Representative, CRN 530978. Consider your objectives, financial situation and needs, and seek licensed advice before making a financial decision. For an assessment of your borrowing position, speak with an Arrivau consultant — we respond within one business day.