Australian Resident Tax Rates (2026-27)

Australian residents are taxed on a progressive schedule: each bracket's rate applies only to the dollars that fall inside it (ATO resident tax rates). For the year running 1 July 2026 to 30 June 2027:

The 15% rate is this year's headline change: it was 16% in 2025-26 and dropped on 1 July 2026, with a further legislated cut to 14% from 1 July 2027 (ATO: new tax cuts). On top of the schedule, most residents pay a 2% Medicare levy on their whole taxable income. These rates apply to taxable income — what remains after deductions — not to gross salary.

Your marginal rate is what your next dollar loses; your effective rate is what your whole income actually pays, which is always lower because the early dollars travelled through the nil and 15% brackets. Confusing the two is the source of the myth that a pay rise can leave you worse off — it cannot, because only the new dollars face the new rate.

2026-27 rates. "Tax after LITO" nets off the Low Income Tax Offset; the marginal column includes the 2% Medicare levy and, between $45,000 and $66,667, the 1.5c LITO taper — which is why $45,000 and $60,000 show 33.5% rather than 32%. HELP repayments would sit on top.

Notice that even at $200,000 the effective rate is under 30%, while headlines talk about "the 45% bracket". Both are true; they measure different things.

The Medicare levy is 2% of taxable income and funds the public health system. It sits outside the bracket schedule, which is why a "30% bracket" really costs 32c per dollar for most workers. Low earners get relief: below an indexed threshold (a little over $28,000 for singles - $28,011 on the 2025-26 legislated thresholds) no levy applies, and it phases in gradually above that, which is why someone on $30,000 pays a reduced levy rather than the full $600.

Separate from the levy is the Medicare levy surcharge — an extra 1% to 1.5% on higher earners (singles above $105,000 for 2026-27) who do not hold private hospital cover. The surcharge is avoidable with cover or by income staying under the threshold; the base levy is not, short of exemption categories such as some foreign residents and Defence personnel. When you check a payslip, remember that standard withholding tables already build the 2% levy in — it is not an extra deduction to look for as a separate line.

The Low Income Tax Offset (LITO) is a rebate applied automatically at assessment — no form, no claim. For 2026-27 it is worth up to $700: the full amount for taxable incomes to $37,500, tapering by 5c per dollar to $325 at $45,000, then by 1.5c per dollar until it disappears at $66,667.

Two practical consequences follow. First, LITO stretches the true tax-free zone: a resident earning about $22,867 pays no income tax at all, because $700 of offset cancels the 15% tax on income above $18,200. Second, because withholding tables ignore LITO, low-income earners are routinely over-withheld through the year and collect the offset as part of their refund — one reason part-time workers often see healthy refunds without claiming a single deduction. LITO reduces income tax only; it cannot reduce the Medicare levy, and unused offset is not refundable in cash.

One change is already law: the 15% rate on the $18,201–$45,000 bracket falls to 14% from 1 July 2027. That is worth up to $268 a year ($26,800 × 1%) to anyone earning $45,000 or more, on top of the identical amount delivered by this year's 16%-to-15% step. Bracket thresholds themselves are not indexed in Australia — they move only when parliament legislates — so "bracket creep" gradually raises effective rates between reforms as wages grow into higher brackets.

Nothing else in the 2026-27 schedule is scheduled to move mid-year: brackets, the Medicare levy rate and LITO all hold for returns covering 1 July 2026 to 30 June 2027. For per-pay withholding amounts built from these rates, see the 2026-27 tax tables; for the quick figures behind this guide, the Australian tax facts page keeps the current numbers in one place.

Only Australian residents for tax purposes get this schedule — and tax residency is its own test, based on where you live and your ties, not on citizenship or visa class alone. Foreign residents pay 30% from their very first dollar up to $135,000, then 37% and 45%, with no tax-free threshold, no LITO and no Medicare levy (ATO foreign resident rates). Working holiday makers on 417 or 462 visas use a third schedule: 15% to $45,000, then the resident brackets, generally without the Medicare levy.

The differences are large — on $50,000, a resident pays $6,270 including the levy and after LITO, while a foreign resident pays $15,000. If you have moved to or from Australia during the year, part-year residency rules apportion the threshold, and it is worth checking your status before assuming either schedule. To see your own figure under the resident rates, put your income through the income tax calculator.