Claim all work-related deductions
Work from home (67c/hour), vehicle expenses, professional development, tools and equipment, union fees and professional memberships. Keep records throughout the year โ not just at tax time.
Salary sacrifice to super
Pre-tax super contributions are taxed at 15% inside super vs your marginal rate (up to 45%). On a $95,000 salary, $10,000 sacrifice saves approximately $2,200 in income tax. Cap: $30,000/year including employer SG.
Get private hospital cover above $93k
Without private hospital cover, you pay a Medicare Levy Surcharge of 1โ1.5% on incomes above $93,000. At $120,000, this costs $1,500/year โ often more than a basic hospital policy costs.
Timing of income and deductions
Capital gains, investment income and large deductions can be timed to minimise tax. If your income will be lower next year, consider deferring a capital gain until then.
Check your PAYG withholding
If you have multiple jobs or your tax isn't being withheld correctly, you may face a large bill at tax time. Check your withholding matches your actual income using this calculator.
Carry-forward super contributions
If your super balance is below $500,000 and you haven't maxed out the $30,000 concessional cap in previous years, you can carry forward unused amounts and make catch-up contributions.
How is income tax calculated in Australia?
Australian income tax uses a progressive system โ you pay a higher rate on higher portions of income, but only on that portion. The first $18,200 is tax-free. Then 19% on $18,201โ$45,000, 32.5% on $45,001โ$120,000, 37% on $120,001โ$180,000, and 45% above $180,000. The 2% Medicare levy applies on top. Offsets like LITO reduce the total tax payable for lower-income earners.
What is the tax-free threshold in Australia for 2025-26?
The statutory tax-free threshold is $18,200 for 2025-26. However, with the Low Income Tax Offset (LITO), Australian residents effectively pay no tax until approximately $21,884. You can claim the tax-free threshold with one employer only (your primary employer). If you have a second job, it should be set up without the tax-free threshold to avoid a tax debt.
What is the Medicare Levy Surcharge and who pays it?
The Medicare Levy Surcharge (MLS) is an additional tax for high-income earners without private hospital cover. It applies at 1% for $93,000โ$108,000 income, 1.25% for $108,001โ$144,000, and 1.5% above $144,000. For couples and families, the income thresholds are higher. Taking out a private hospital insurance policy removes the MLS entirely. Many people save money by taking out a basic hospital policy rather than paying the surcharge.
How much tax do I pay on $100,000 in Australia?
On $100,000 gross income as an Australian resident in 2025-26: income tax is approximately $24,497 (using the bracket calculations), plus Medicare levy of $2,000 (2%), minus LITO of approximately $0 (phases out by $66,667). Total estimated tax: approximately $26,497. Take-home pay: approximately $73,503, or $6,125/month. Use our calculator above for your exact figures including salary sacrifice and HECS.
When is the Australian tax year?
The Australian financial year runs from 1 July to 30 June. The 2025-26 tax year covers 1 July 2025 to 30 June 2026. Tax returns for this year can be lodged from 1 July 2026 (through myTax or a registered tax agent). The lodgement deadline for self-lodgers is 31 October 2026. If using a tax agent, you may have an extended deadline.
What HECS/HELP repayments do I need to make?
HECS/HELP repayments are compulsory once your repayment income exceeds $54,435 for 2025-26. The repayment rate starts at 1% and increases to 10% for incomes over $151,201. Repayments are automatically withheld through PAYG if you tell your employer you have a HECS debt. They are calculated on your total repayment income (income plus reportable fringe benefits plus net investment losses), not just your salary.
Can I reduce my taxable income in Australia?
Yes โ legally, through: salary sacrificing into superannuation (reduces assessable income), claiming all legitimate work-related deductions (WFH, vehicle, equipment, education), negative gearing on investment properties (losses offset income), timing of income and deductions, and making personal super contributions (may be tax deductible if claiming a personal super deduction notice). Always keep records and consult a registered tax agent for personalised advice.
