The salary on an Australian job offer is the gross figure, before tax. What reaches your bank account is smaller, and the gap is made of two things: income tax and the Medicare levy. There is also superannuation, but that is paid by your employer on top of your wage, so it does not come out of your take-home pay at all. Here is how the 2025-26 numbers work, for the income year that runs from 1 July 2025 to 30 June 2026.
The two deductions that lower your pay
Income tax is charged in brackets, and only the income inside each band is taxed at that band’s rate. For 2025-26 residents pay nothing on the first $18,200, then 16 percent up to $45,000, 30 percent up to $135,000, 37 percent up to $190,000, and 45 percent on anything above that. Because the brackets are marginal, a pay rise never costs you money overall; only the slice in the higher band is taxed at the higher rate.
The Low Income Tax Offset trims the bill for lower earners. It is worth up to $700 for incomes up to $37,500, then tapers away, reaching nil at $66,667. The Australian Taxation Office applies it automatically when you lodge your return, so you do not claim it separately.
The Medicare levy is a flat 2 percent of taxable income that funds the public health system. It is reduced or removed at low income levels: for a single person with no dependants in 2025-26 it starts to phase in above $28,011 and reaches the full 2 percent at $35,013.
You can see all of this worked out for your own salary with the Australia salary calculator, or look at just the tax portion with the income tax calculator.
A worked example
Take someone earning $90,000 in 2025-26. Income tax comes to $17,788, made up of 16 percent on the band from $18,200 to $45,000 and 30 percent on the band from $45,000 to $90,000, with no Low Income Tax Offset left at that income. The Medicare levy adds 2 percent of $90,000, which is $1,800. Take-home pay is therefore about $70,412 a year, or roughly $5,868 a month. The total deductions work out to about 21.8 percent of the salary, so a little over a fifth goes to tax and the levy.
On a $60,000 salary the picture is gentler: income tax is $8,688 after a small Low Income Tax Offset, the levy is $1,200, and take-home pay is about $50,112 a year. The effective rate there is around 16.5 percent, well below the 30 percent bracket the top of that salary sits in.
Superannuation does not come out of your pay
This trips up a lot of people. The superannuation guarantee, which rose to 12 percent on 1 July 2025, is a contribution your employer pays into your super fund on top of your wage. It is not deducted from your salary. So on a $90,000 salary your employer also pays $10,800 into super, money set aside for your retirement that never appears in your take-home figure. If you choose to salary sacrifice extra into super, that part is taken from your gross pay and taxed at 15 percent inside the fund, which can beat your marginal rate once you are past the 30 percent bracket.
What is left out
A few things can change your real take-home pay that this overview does not include. A HELP or HECS study loan adds a compulsory repayment based on your income, taken through your payslip. Higher earners without private hospital cover, broadly singles above about $101,000, pay a Medicare levy surcharge of 1 to 1.5 percent on top of the standard levy. Work-related deductions, on the other hand, lower the income that tax and the levy are charged on, so keeping receipts can pull your bill down at tax time.
The 2026-27 year: the bottom rate is now 15 percent
The 2025-26 income year ended on 30 June 2026, and the legislated cut to the bottom rate has now taken effect. From 1 July 2026, for the 2026-27 income year, the 16 percent rate on the $18,200 to $45,000 band drops to 15 percent, and a further cut to 14 percent follows on 1 July 2027. The tax-free threshold, the $45,000, $135,000 and $190,000 bracket points, and the 30, 37 and 45 percent rates all stay exactly where they are, so the change lowers the bill without altering what you earn.
The saving is modest because it applies to a single band. The one percentage point off the $18,200 to $45,000 slice is worth up to $268 a year, and everyone earning above $45,000 gets that same $268, no more. Take the $90,000 salary from above: income tax for 2026-27 is $17,520 rather than the 2025-26 figure of $17,788, the Medicare levy is still $1,800, and take-home pay rises to about $70,680, roughly $268 better off. The worked examples and the calculator above use the 2025-26 rates, which are the ones the Australian Taxation Office applies to the return you lodge for the year that has just ended; for the current 2026-27 year, subtract up to $268 from the income tax figure to see where you stand.
If you are weighing up a move or a pay rise, the purchasing power tool shows what a salary is actually worth once local prices are taken into account, and the inflation calculator shows how far a given income stretches over time.
FAQ
Is superannuation taken out of my salary? No. The super guarantee, 12 percent from 1 July 2025, is paid by your employer into your fund on top of your wage. It does not reduce your take-home pay. Only voluntary salary sacrifice comes from your gross pay.
What is the tax-free threshold? The first $18,200 of a resident’s income is free of income tax. You only pay tax on earnings above that, and then only at the rate for each band as your income rises through them.
Why is my effective tax rate lower than my bracket? Brackets are marginal, so the higher rate applies only to the income inside that band, not your whole salary. The tax-free threshold and the Low Income Tax Offset pull the average rate down further, which is why the share of your salary that goes to tax is lower than your top bracket.
Does this include the Medicare levy surcharge? No. The surcharge is separate from the standard 2 percent levy and applies only to higher earners without adequate private hospital cover. The figures here use the standard levy only.
Which year do these figures cover? The 2025-26 income year, 1 July 2025 to 30 June 2026, which is the year you lodge a return for from July 2026. For the current 2026-27 year that began on 1 July 2026, the bottom rate has dropped from 16 to 15 percent, worth up to $268 a year; every other rate and threshold is unchanged.
Sources: ATO tax rates for Australian residents, ATO Low income tax offset, ATO new tax cuts for every Australian taxpayer. This is general information, not tax advice.