HELP/HECS Repayment 2026-27: Marginal Rates, Thresholds & How Much You'll Pay

Direct answer: From the 2025-26 income year, Australia moved HELP/HECS repayments to a marginal system — you now repay only on the income above the threshold, not a flat percentage of your total income. For 2026-27, the first $69,528 is exempt, and repayments are 15% of income above that up to $129,717, then 17% above that up to $186,050, with a 10% cap for higher earners. This is substantially fairer than the old system.

Data note: The figures in this article use the ATO's published compulsory HELP repayment thresholds and rates for the 2026-27 income year, as at July 2026. The marginal repayment system began in the 2025-26 income year. Repayment income is not the same as taxable income — it includes some add-backs such as reportable fringe benefits, reportable super contributions, and net investment losses. Indexation on HELP debt is applied on 1 June each year. All dollar amounts are in Australian dollars.

The old system vs the new marginal system

Under the old HELP repayment system (pre-2025-26), once your repayment income crossed a threshold, you paid a flat percentage of your total income toward your HELP debt. Crossing from $69,527 to $69,528 could trigger a repayment of thousands of dollars on your entire income — a cliff-edge design that penalised small pay rises.

The marginal system, which took effect from the 2025-26 income year, works like income tax itself: you only pay the repayment percentage on the portion of income above each threshold. The first $69,528 of repayment income in 2026-27 attracts zero HELP repayment. The repayment is calculated only on income above that amount. This means crossing a threshold no longer creates a sudden jump in total repayment — the system is now graduated and intuitive.

2026-27 HELP repayment thresholds and rates

The ATO has published the following schedule for the income year ending 30 June 2027:

1. Repayment income $0 to $69,528 · Nil repayment
2. Repayment income $69,529 to $129,717 · 15% of the amount above $69,528
3. Repayment income $129,718 to $186,050 · $9,028 plus 17% of the amount above $129,717
4. Repayment income $186,051 and above · 10% of total repayment income (the cap)

The 10% cap at $186,051+ means the maximum compulsory repayment in any year is one-tenth of your total repayment income. This replaces the old system's flat 10% rate that applied once you crossed the top threshold. Under the marginal system, the cap operates as a ceiling: if the marginal calculation produces a number above 10% of total income, the 10% cap applies instead.

Sample repayments at four income levels

To show how the marginal system works in practice, here are the HELP repayments at four sample repayment incomes. Repayment income is typically close to taxable income plus reportable fringe benefits and reportable super contributions — we use the taxable income figure here for simplicity.

For repayment income of $75,000: $75,000 minus the $69,528 threshold equals $5,472. At 15%, the repayment is $820.80 for the year. Under the old flat-rate system at this income level, the repayment would have been calculated on total income — likely around $3,000 or more depending on the old rate table. The saving from the marginal design is significant.

For repayment income of $100,000: $100,000 minus $69,528 equals $30,472. At 15%, the repayment is $4,570.80 for the year. This is still within the first repayment tier. Under the old system, a flat 7% or 7.5% rate on $100,000 would have meant a repayment of $7,000 to $7,500.

For repayment income of $140,000: The first tier covers the $60,189 range from $69,529 to $129,717, producing $9,028. The second tier applies to the $10,283 above $129,718, at 17%. That gives $9,028 + $1,748.11 = $10,776.11. Under the old flat-rate system at $140,000, the repayment would have been around $14,000 (10% of total income). The marginal calculation saves approximately $3,200.

For repayment income of $200,000: Above $186,051, the 10% cap applies. The cap means $20,000 is the maximum repayment regardless of which tier the income falls into. Under the marginal calculation without the cap, the amount would be higher, but the cap limits it to 10% of $200,000, or $20,000. Under the old system, this income would also have triggered a 10% repayment of $20,000 — at high incomes the cap operates similarly, but the pathway to reaching it is smoother.

What is repayment income?

Repayment income is not identical to taxable income, and the difference matters. The ATO defines repayment income as:

1. Taxable income for the year
2. Plus reportable fringe benefits amounts (shown on your PAYG payment summary or income statement)
3. Plus total net investment losses (which are added back for HELP purposes)
4. Plus reportable super contributions above the compulsory guarantee amount

If your employer provides a fringe benefit of $15,000 and your taxable income is $85,000, your repayment income may be $100,000. This pushes you further into the repayment tiers and increases the amount withheld. The Arrivau income tax calculator at /calculators/income-tax/ lets you model these add-backs to get an accurate repayment estimate.

Indexation: your debt still grows

Compulsory repayments reduce the balance of your HELP debt, but the remaining balance is indexed on 1 June each year. Indexation is based on the Consumer Price Index (CPI) and can add a material amount to the outstanding balance if the debt is large and inflation is elevated. Making voluntary repayments before the 1 June indexation date can reduce the indexed amount, though the benefit depends on your income trajectory and whether you expect to repay the debt in full over the medium term.

Voluntary repayments are separate from compulsory repayments and do not reduce the compulsory amount withheld by your employer. They come from your own funds and are made directly to the ATO. Some borrowers use voluntary repayments strategically ahead of a home loan application because a HELP debt reduces net income on a serviceability assessment, but this is a cash-flow trade-off that needs individual modelling.

How HELP affects your borrowing power

Lenders assess your after-tax, after-HELP-repayment income when calculating serviceability for a home loan. A HELP debt therefore reduces your borrowing power in two ways: your take-home pay is lower while the debt remains, and the higher your repayment income, the larger the compulsory repayment. Under the marginal system the repayment grows gradually with income rather than jumping at thresholds, which makes income projections more stable for borrowers expecting salary increases.

If you are close to repaying the debt in full and considering a loan application, it may be worth running two scenarios in the borrowing-power calculator: one with the HELP repayment included and one without, to see the capacity difference once the debt is cleared. Speak with an Arrivau consultant — we respond within one business day.

Voluntary repayments: when they make sense

Voluntary repayments reduce the principal faster and can lower the total interest-equivalent cost from indexation. The decision to make a voluntary repayment depends on:

1. Your remaining HELP balance and expected repayment timeline
2. Your marginal tax rate and whether cash would be better deployed elsewhere
3. Whether you are applying for a home loan in the near term and need to maximise borrowing capacity
4. The 1 June indexation date, since a repayment before indexation reduces the balance that CPI is applied to

Because HELP debt is not a commercial loan with interest, many financial advisers treat it as low-priority relative to consumer debt or saving for a home deposit. However, the reduction in take-home pay from compulsory repayments is a real cash-flow impact that flows through to household budgets and lending assessments.

Internal links for the next decision

• Income tax calculator — model tax, HELP, MLS and take-home pay in one pass
• Borrowing power calculator — see how HELP repayments affect your borrowing capacity
• Australian income tax rates 2026-27 — the full bracket and rate schedule
• Medicare Levy & MLS surcharge 2026 — the other compulsory levies on income
• All calculators and tools

Information sources

This article draws on the ATO's published HELP repayment thresholds and rates for the 2026-27 income year, as at July 2026. The marginal repayment system was enacted in legislation applying from the 2025-26 income year and continues for 2026-27. Indexation methodology is set under the Higher Education Support Act 2003. Repayment income definitions and add-back rules are published in the ATO's guidance for HELP repayment income.

FAQ

Do I repay HELP on my whole income under the 2026-27 system?

No. The 2026-27 marginal system means you repay only on the income above the $69,528 threshold. The first $69,528 of repayment income triggers zero HELP repayment. This is the main improvement over the old flat-rate system.

What happens if my income crosses the $186,050 cap threshold?

Once repayment income reaches $186,051, your compulsory HELP repayment is capped at 10% of total repayment income. The cap ensures that no one pays more than one-tenth of their income toward HELP in a single year.

How does the employer know how much HELP to withhold?

Your employer withholds HELP repayments based on the information you provide on your Tax File Number Declaration form. If you advise the employer that you have a HELP debt, they will apply the ATO withholding schedules. Any shortfall or overpayment is reconciled when you lodge your tax return.

Does a HELP debt affect my home loan application?

Yes. Lenders assess your net income after HELP repayments. A HELP debt reduces your take-home pay and therefore reduces your assessed borrowing capacity. The Arrivau borrowing power calculator at /calculators/borrowing-power/ can estimate the impact.

Can I make voluntary repayments to clear my HELP debt faster?

Yes. Voluntary repayments can be made directly to the ATO at any time and are in addition to compulsory employer withholdings. They reduce the balance before indexation on 1 June, which can lower the indexed amount.

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.