How Is a Bonus Taxed in Australia?

No. Australia has no bonus tax, no flat rate for one-off payments, and no penalty for being paid a lump sum. A bonus is simply added to your assessable income for the year and taxed under the ordinary resident tax brackets, with the 2% Medicare levy on top.

The persistent myth that "bonuses are taxed at 47%" comes from confusing two different things: the tax you ultimately owe (set by your annual income and the brackets) and the amount withheld from the single payslip that carries the bonus (set by an ATO withholding schedule that can, in some pay setups, take out more than the final tax). The withholding is a prepayment, not the tax itself — anything withheld beyond your true liability comes back through your tax return.

A bonus is taxed at the marginal rate applying to the income range it lands in. For 2026-27, resident rates are: nil to $18,200; 15% to $45,000; 30% to $135,000; 37% to $190,000; and 45% above $190,000 — plus the 2% Medicare levy for most taxpayers. The low income tax offset (maximum $700) has fully phased out by around $66,667, so it rarely interacts with bonus income.

Stack the bonus on top of your salary to find its rate. A $5,000 bonus on a $70,000 salary lifts income to $75,000, entirely inside the 30% bracket, so each bonus dollar loses 32 cents including the levy. The same bonus on a $132,000 salary straddles a boundary: the first $3,000 is taxed at 30% + 2% and the remaining $2,000 at 37% + 2%, an effective 34.8% across the bonus. The full bracket detail is on our 2026-27 tax tables page.

Here is the complete arithmetic for a fortnightly-paid employee, from what the bonus truly costs in tax to what the payslip can show under the simpler of the ATO's two lump-sum withholding methods.

Figures are illustrative — the published withholding tables use rounded coefficients, so real payroll output differs by a few dollars. The shape, though, is exactly this: the payslip can suggest a ~36% hit, the law takes 32%, and the difference is squared up when you lodge. Model your own payslip with the payslip calculator.

Employers withhold from bonuses using ATO Schedule 5, the tax table for back payments, commissions and bonuses. It offers two methods:

• Method A adds the bonus to the current period's earnings and applies the regular pay-period table. Because that table assumes every fortnight looks like this one, a $7,692 fortnight is withheld as though you earn about $200,000 a year — pulling part of the bonus into 45% territory that your actual income never reaches.
• Method B spreads the bonus across the pay periods of the year (or, for payments relating to a single period, treats it as belonging there) before working out the extra withholding. For the $5,000-on-$70,000 example this lands close to the true $1,600.

Which method you experience is a payroll-software setting, not a choice you make — and neither changes your final tax by a cent. Method A simply front-loads more of it, converting the excess into a refund at assessment.

Almost always, yes. Performance bonuses and commissions count as ordinary time earnings, so they attract the 12% superannuation guarantee on top: a $5,000 bonus should generate $600 of employer super, taxed at 15% in the fund. The main exception is a bonus paid wholly for overtime work, which sits outside ordinary time earnings.

A bonus can also be redirected into super rather than taken as cash. Under an effective salary-sacrifice arrangement — agreed in writing before the bonus is earned, not after — the $5,000 would be taxed at the 15% contributions rate instead of 32%, saving $850 in tax, provided it fits inside the $32,500 concessional contributions cap alongside employer SG. Compare the outcomes with our superannuation calculator.

Because a bonus raises your income for the whole year, it can move more than just your tax bill:

• Bracket boundaries. Only the dollars above a boundary pay the higher rate. Crossing $135,000 does not re-tax your salary at 37% — a common fear with no basis.
• Income-tested obligations. Study-loan repayments and the Medicare levy surcharge are assessed on annual income measures, so a bonus that lifts you across a repayment or surcharge threshold increases what you owe at assessment, even though nothing extra was withheld for it during the year.
• Income-tested benefits. Family payments, child-care subsidy and similar supports use annual income estimates; a mid-year bonus that was not in your estimate can create an overpayment to repay later.

If a bonus is likely to move you across one of these lines, updating your income estimates promptly is the cheapest fix. The main thresholds for the year are collected on our Australian tax facts page.

Two honest levers exist. First, salary sacrifice the bonus into super before it is paid: a sacrificed bonus is taxed at 15% inside your fund instead of your marginal rate, saving 17c per dollar at the 30% + 2% levy rate - but it counts toward the $32,500 concessional cap together with your employer's 12%, and the arrangement must be agreed with your employer before you become entitled to the bonus. Second, deductible spending in the same year (including the new $1,000 standard work-expense deduction from 2026-27) reduces the taxable income the bonus lands on. What does not work: asking payroll to "spread" the bonus changes withholding timing, not the tax itself, and the tax is settled at your return either way.