Australian Tax Brackets 2025-26: The Definitive Guide
The 2025-26 financial year cements the Stage 3 tax cuts and introduces a critical milestone for retirement savings. Here is the authoritative breakdown of your obligations and opportunities.
Table of Contents
Key Takeaways: FY 2025-26
- Tax Rates Stable:The “Stage 3” brackets (16%, 30%, 37%, 45%) remain in full effect.
- Super Increases: The Superannuation Guarantee hits 12% on 1 July 2025.
- Property Investment: Strategic property structuring and depreciation can significantly offset high tax brackets.
- Foreign Residents: No tax-free threshold; rates start at 30% from the first dollar.
Fiscal Year 2026 (FY26) represents a period of legislative stability for income tax, allowing Australians to plan with certainty. However, the interplay between the 12% Superannuation Guarantee and the Medicare Levy thresholds means your take-home pay calculation requires precision. To see exactly how these changes impact you, use our free 2025-26 Australian Tax Calculator.
Who this guide is for
- •PAYG professionals buying their first or second investment property (IP)
- •Small business owners navigating the tax implications of property investments
- •Time-poor high earners seeking streamlined tax bracket insights and wealth creation strategies
Visual Breakdown: 2025-26 Tax Brackets
Tax Free
$0 - $18,200
Base Rate
$18,201 - $45,000
Standard
$45,001 - $135,000
Upper
$135,001 - $190,000
Top
$190,000+
Resident Tax Rates
| Taxable Income | Tax Payable |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 + 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 + 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 + 45c for each $1 over $190,000 |
Medicare Levy & Surcharge
Standard Levy
Most residents pay 2% of their taxable income to fund the public health system. Low-income earners may be eligible for a reduction or exemption.
Levy Surcharge
High earners without private hospital cover pay an extra 1% to 1.5%. This is strictly a tax to encourage private insurance uptake. Read more on the ATO website.
Medicare Levy Surcharge (MLS) Thresholds
| Tier | Single Income | Family Income | Surcharge |
|---|---|---|---|
| Base Tier | Below $97,000 | Below $194,000 | 0% |
| Tier 1 | $97,001 - $111,000 | $194,001 - $222,000 | 1.0% |
| Tier 2 | $111,001 - $151,000 | $222,001 - $302,000 | 1.25% |
| Tier 3 | Over $151,000 | Over $302,000 | 1.5% |
HELP & STSL Repayments
If you have a Higher Education Loan Program (HELP) debt, repayments are compulsory once your income exceeds the minimum repayment threshold. For FY26, these are the estimated rates based on ATO thresholds:
| Repayment Income (RI) | Repayment Rate |
|---|---|
| Below $54,435 | Nil |
| $54,435 - $62,850 | 1.0% |
| $62,851 - $66,620 | 2.0% |
| $83,895 - $89,290 | 5.0% |
| $113,268 - $120,465 | 8.0% |
| $159,664 and above | 10.0% |
*Thresholds are indexed annually. Rates shown are estimates based on CPI trends.
Foreign Resident Rates
Critical distinction: Foreign residents for tax purposes do not receive the tax-free threshold.
| Taxable Income | Tax Payable |
|---|---|
| $0 – $135,000 | 30c for each $1 |
| $135,001 – $190,000 | $40,500 + 37c for each $1 over $135,000 |
| $190,001 and over | $60,850 + 45c for each $1 over $190,000 |
The 12% Superannuation Milestone
Final Scheduled Increase
From 1 July 2025, the Super Guarantee (SG) rises to 12%. This completes the legislative roadmap for superannuation increases.
Salary Impact Scenarios
Base + Super Package
Take-home pay remains steady; Employer pays more.
Total Remuneration Package (TRP)
Take-home pay decreases by ~0.5%.
Real-World Scenarios
The “Average” Earner
Sarah, Marketing Manager
High Income Earner
David, Software Engineer
Property Investment & Tax Brackets
For many Australians, property investment is the primary vehicle for wealth creation and tax management. Understanding how your tax bracket interacts with property deductions is critical.
The Golden Rule
Never invest in property purely for the tax breaks. A tax deduction simply means you are losing less money, but you are still losing money. Focus on high-quality assets with strong fundamentals.
Disclaimer: This is general information, not financial advice. Please consult a professional before making investment decisions.
Download the 7-Step Property Strategy Checklist (PDF)
A comprehensive guide for PAYG professionals to structure their next property purchase for maximum tax efficiency.
Scenario 1: Negative Gearing & Depreciation
Buying a new build (high depreciation) on a $150,000 income. Read more in our negative gearing and tax and property depreciation guides.
Scenario 2: Capital Growth vs High Yield
Comparing two $700,000 properties over 10 years for an investor in the 45% bracket.
Property A: 6% Growth, 3% Yield
Generates lower taxable income now, but compounding growth adds $553k in value over 10 years (taxed only when sold, with 50% CGT discount).
Property B: 3% Growth, 6% Yield
Generates high rental income, but 45% is lost to tax immediately. Only adds $240k in value over 10 years.
Structuring & Financing
How you structure your loan can be just as important as the property itself. Using an Interest-Only loan for your investment property while directing surplus cash flow into an Offset account attached to your non-deductible principal place of residence (PPOR) is a classic tax-minimization strategy.
Wondering if you have the borrowing capacity for this strategy? Our integrated Loans & Brokerage service works directly with our tax team to ensure your financing is optimized for your specific tax bracket. We also act as your central advisor, coordinating with buyers' agents and mortgage brokers to streamline the process.
Strategic Implications for FY26
Salary Packaging
With the 12% Super rate, employees on “Total Remuneration” packages should review their contracts. The 0.5% increase will likely reduce cash salary unless renegotiated. Employers can model this using our Payroll Cost Calculator.
Tax Planning
The top bracket threshold remains at $190,000. For high income earners, maximizing concessional super contributions (capped at $30,000) remains a key strategy to reduce tax. Need expert guidance? Explore our Advisory Services.
Business Exits
SME owners often rely on property as part of their retirement strategy. Integrating your property portfolio with your business succession plan is vital. Discover our Business Advisory services for comprehensive exit planning.
Frequently Asked Questions
What is the tax-free threshold for 2025-26?
Does the 12% super increase reduce my take-home pay?
When do I pay the Medicare Levy Surcharge?
Ready to optimize your tax strategy?
Stop guessing and start planning. Book a strategy session with our tax experts to ensure your structuring, investments, and superannuation are working perfectly together for FY26.
Data Sources & Methodology
Tax Rates: Calculations and tables are based on the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 and official ATO withholding schedules.
Superannuation: Rates reflect the legislated schedule in the Superannuation Guarantee (Administration) Act 1992.
Disclaimer: This guide is for informational purposes only and does not constitute financial advice. Tax laws are subject to change. Please consult a qualified tax professional for your specific circumstances.
Model Your FY26
Don't rely on estimates. Use our detailed calculator to see your exact take-home pay, tax, and super split.
Launch CalculatorIncludes Medicare, HELP & MLS logic
Expert Review
Numberz Tax Team
Chartered Accountants & Tax Researchers