Australian Income Tax Brackets Explained (FY 2025–26)
Last updated: June 2026
Australian residents pay income tax in progressive brackets, with a generous tax-free threshold on the first slice of income. Following the Stage 3 tax cuts, the rates for FY 2025–26 are lower than in previous years. Here is how they work.
The tax-free threshold
The first $18,200 of a resident’s income is tax-free. You only start paying income tax on earnings above this threshold, which is why low earners pay little or no tax.
The FY 2025–26 resident brackets
For Australian residents, income above the tax-free threshold is taxed as follows:
- 0% up to $18,200
- 16% from $18,201 to $45,000
- 30% from $45,001 to $135,000
- 37% from $135,001 to $190,000
- 45% above $190,000
The Low Income Tax Offset (LITO)
Low earners also receive the Low Income Tax Offset, worth up to $700, which reduces the tax payable (not the income). It begins to phase out above $37,500 and disappears at around $66,667, further reducing tax for those on modest incomes.
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