Australia taxes pay differently from almost everywhere else
Two things surprise people who have paid tax elsewhere. First, there is no separate social-insurance deduction. No National Insurance, no Sozialabgaben, no FICA — Medicare and the welfare system are funded through the income tax system itself, topped up by a 2% Medicare levy. Second, superannuation is not deducted from your pay at all. Your employer pays 12% on top of your salary into your super fund, so an $80,000 salary really is a package worth $89,600. That makes headline Australian salaries look lower than they are compared with countries where the pension contribution comes out of the quoted figure.
The income year also runs on its own calendar: 1 July to 30 June. We are currently in the 2026–27 year, which began on 1 July 2026 and brought the legislated cut in the first marginal rate from 16% to 15%. On $80,000 that cut is worth $268 a year — income tax of $14,520 and Medicare of $1,600 leave $63,880, where the same salary returned $63,612 last year. You can switch between the two years inside the pay calculator.
Why $30,000 is taxed harder than $40,000
The Medicare levy is not simply 2% of everything. Below a low-income threshold you pay none of it, and between that threshold and the point where the full 2% applies, the levy phases in at 10 cents in the dollar. That phase-in sits on top of the 15% income tax band, so the marginal burden in that stretch is far higher than the rate table suggests:
| Taxable income | Marginal burden | What's happening |
|---|---|---|
| $25,000 | 15.00% | Income tax only |
| $30,000 | 25.00% | 15% tax + Medicare phasing in at 10% |
| $40,000 | 22.00% | 15% tax + 2% Medicare + LITO withdrawal 5% |
| $50,000 | 33.50% | 30% tax + 2% Medicare + LITO withdrawal 1.5% |
A worker on $30,000 keeps 75 cents of their next dollar. A worker on $40,000 keeps 78 cents. The lower earner faces the steeper marginal rate — the opposite of what a progressive system is supposed to do — purely because the Medicare phase-in and the Low Income Tax Offset are being withdrawn in overlapping ranges.
The $67,000 line for graduates
If you have a HECS-HELP debt, crossing $67,000 adds a compulsory repayment of 15% on the income above it. Combined with 30% income tax and the 2% Medicare levy, the marginal burden jumps from 32% to 47% the moment you cross the line — a 15 percentage-point step for what may be a small pay rise. Going from $67,000 to $68,000 adds $1,000 to gross pay and about $530 to take-home.
The good news is that this is much gentler than it used to be. Under the old system the repayment was a percentage of your entire income, so crossing the threshold by a single dollar could cost thousands at once. Since 2025–26 the repayment is marginal — charged only on income above the threshold — which removed that cliff. Tick the HELP box in the calculator to see the effect on your own salary.
What the calculator covers — and what it doesn't
- Salary is treated as taxable income. Work-related deductions, which are unusually significant in Australia, will lower your actual assessable income.
- The Medicare Levy Surcharge is not included. Higher earners without private hospital cover pay an extra 1%–1.5% on top of the 2% levy — a genuine cost of not holding insurance.
- Salary sacrifice is not modelled, including additional super contributions and novated leases.
- Offsets beyond LITO are excluded, as are franking credits, investment income and capital gains.
- Residency matters. Foreign residents and working holiday makers are taxed on entirely different scales with no tax-free threshold.
- State taxes are separate. Stamp duty, land tax and payroll tax are levied by states and territories, not the ATO.
Rates come from the ATO for the 2026–27 income year. If a figure looks wrong, please tell us — our methodology explains how each calculator is checked, and the ATO's own tools are the authority for your exact position.