Australian Personal Tax Rates Explained

In this article:

Australian Marginal Tax Rates Explained

In Australia, more income tax is paid for every dollar you earn, after your allowable tax deductions.

Remember this:

All Taxable Income – Tax Deductions = Taxable Income

For example, Joe calculates that he earns $100,000 from his job plus dividends. He has $20,000 in tax deductions.

Joe’s “taxable income” is $80,000 ($100,000 income – $20,000 deductions).

Joe’s friend Barney earns $50,000 after tax deductions. Joe will pay more tax for each dollar he earns. 

If you earn less than $18,000 you won’t be liable for income tax — but you may need to lodge a tax return if you:

  • Paid tax on your income (e.g. PAYG)
  • If you some received some other tax benefit (e.g. Super, health insurance)

Those are just two examples, click here to use the ATO’s free calculator.

Marginal TaxRates Increase With Income

If you earn $50,000 you’ll pay 32.5 cents of tax for every extra dollar you earn.

If you earn $100,000 you’ll pay 37 cents of tax for every extra dollar.

And if you earn over $180,000, you’ll pay 45 cents of tax for every extra dollar.

The maximum rate of income tax (45%) applies to anyone earning more than $180,000 each year.

Other taxes

In addition to income taxes, two other common types of tax that most Australians pay each year include:

What else do I need to know?

Marginal Tax Rates are constantly changing, so it’s important to keep an eye on the latest changes from one tax year to the next or speak to a qualified tax agent.

Click here to use our Free Income Tax Estimator.

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Owen Raszkiewicz

Owen Raszkiewicz

Owen is the Founder of Rask, Lead Analyst for Rask Core 🌏 and head educator over on Rask Education. Prior to founding Rask, Owen was an investment analyst at the highly regarded managed funds research business Zenith Investment Partners and a Writer/Analyst for The Motley Fool Australia. Owen’s formal qualifications include a Master of Applied Finance and Master of Financial Planning from Kaplan Professional, Bachelor of Technology (Information Systems) from Swinburne University of Technology, Advanced Diploma of Financial Services (Financial Planning) and Diploma of Mortgage Broking Management. He's also completed level 1 of the Chartered Financial Analyst (CFA) program.

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