What is the tax-free threshold?
The first $18,200 you earn in a year has no income tax on it.
The rule is that you generally claim it from one payer at a time, so a second job can leave tax to pay at the end of the year.
The rule
- A resident pays no income tax on the first $18,200 of taxable income in a year. Above it, 2026-27 income tax is 15c for each $1 from $18,201 to $45,000, then $4,020 plus 30c from $45,001 to $135,000, then $31,020 plus 37c to $190,000, then $51,370 plus 45c. The Medicare levy of 2% is on top.
- From 1 July 2027 the lowest rate falls from 15% to 14%. The Budget papers say so, and the ATO has not yet published a 2027-28 table.
- From 2027-28 a Working Australians Tax Offset of up to $250 applies to workers (Act No. 49 of 2026, Schedule 3). Treasury says it lifts the effective tax-free threshold to $19,985, or up to $24,985 with the low income tax offset.
- The ATO says that if you have more than one payer at the same time you generally claim the threshold from one payer, usually the one that pays the most. If you are certain your total income will be $18,200 or less, you can claim it from each payer.
- When an employer applies the threshold, tax is held back only when pay is above $363 a week, $726 a fortnight or $1,573 a month.
- At tax time the ATO adds up all your income and all the tax held back. If too much was held back you get a refund. If too little, you can get a bill.
- Income tax is charged one step at a time, so a dollar over a line is taxed at the next rate for that dollar only. Not every charge works that way: the Medicare levy surcharge, for a single person without private hospital cover, is charged on the whole income once it passes $105,000 in 2026-27.
What people ask
Should I claim the tax free threshold?
The rule is that you generally claim it from one payer at a time, usually the one that pays you the most. With a second job, the ATO says the other payers can be asked to hold back tax at the higher no-threshold rate if your total income will be over $18,200. The choice is made with your employer, and this page does not apply the rule to your case.
How much tax do you pay on 100k in Australia?
For a resident in 2026-27 on $100,000 of taxable income: $20,520 of income tax ($4,020 plus 30c on the $55,000 over $45,000) and $2,000 of Medicare levy, $22,520 in all. Deductions and offsets change it.
How does tax work with 2 jobs?
Your pay from both jobs is added together and taxed on one set of steps, with one tax-free $18,200 at the bottom. The widget above stacks job 2 on top of job 1. How much each employer holds back each pay comes from the ATO's withholding tables, which this page does not use.
How much can I earn before I pay tax?
A resident pays no income tax on the first $18,200 in 2026-27. The low income tax offset, $700 up to $37,500 of income, cancels the 15c tax on the next few thousand dollars, so income tax is nil up to about $22,867. The Medicare levy starts above $28,011 (the 2025-26 threshold).
If I move into a higher tax bracket, do I take home less?
Not because of income tax. Only the dollars over the line are taxed at the higher rate. Some other charges step differently, for example the Medicare levy surcharge, which is charged on the whole income once it is over its line.