Tax
Tax-Free Threshold Explained
Short answer
The tax-free threshold is the first $18,200 of income an Australian resident can earn each year without paying income tax. You claim it from one job on your TFN declaration, normally your highest-paying one. For 2026-27, income above it is taxed at 15% to $45,000, then 30% to $135,000.
Who can claim it
Australian residents for tax purposes can claim the threshold. Foreign residents cannot - they pay tax from the first dollar. You tell your employer by ticking the threshold question on your TFN declaration.
Two jobs and the threshold
You generally claim the threshold from only one (usually higher-paying) job. If you claim it from both, not enough tax is withheld across the year and you may owe at tax time. See two jobs and tax.
Frequently asked questions
Should I claim the threshold on my second job?+
Usually no. Claim it on your main job to avoid under-withholding across both.
Do foreign residents get the threshold?+
No. Foreign residents are taxed from the first dollar with no tax-free threshold.
Will not claiming it mean I lose money?+
No - more is withheld during the year, but you can get the excess back at tax time.
Sources & methodology
- ATO - Personal income tax: new tax cuts (15% rate from 1 July 2026)
- Income Tax Rates Act 1986 (legislation.gov.au)
- ATO - Study and training loan repayment thresholds and rates
- ATO - Super guarantee
- ATO - Contribution caps
- ATO - Payday Super and the annual maximum contribution base
- ATO - Medicare levy
- ATO - Medicare levy surcharge income thresholds and rates
- Fair Work Ombudsman - Pay slips
- How we calculate these estimates
Last updated 13 August 2026. Figures use the 2026-27 financial year.
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