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FY2026

Australian tax rates and rules for 1 July 2025 to 30 June 2026, and what changed from FY2025.
Author

Benedict Thekkel

1. The year at a glance

Item FY2026
Income year 1 July 2025 to 30 June 2026
Self-lodgement deadline 31 October 2026
Amendment window Two years from the notice of assessment

The tax brackets did not change. The changes are around them.

Rule FY2025 FY2026
Resident tax brackets Stage 3 rates Unchanged
Study loan repayments One rate on the whole repayment income, from $54,435 Marginal: 15c per $1 above $67,000 only
Study loan balances Cut by 20% (law passed August 2025)
Super guarantee 11.5% 12%
Medicare levy low-income threshold (single) $27,222 $28,011 (set in the 2026 Budget, backdated to 1 July 2025)
Medicare levy surcharge threshold (single) $97,000 $101,000
ATO interest charges (GIC, SIC) Deductible Not deductible
Work from home fixed rate 70c per hour 70c per hour
Car cents per kilometre 88c 88c
Concessional contributions cap $30,000 $30,000
Instant asset write-off (small business) Under $20,000 Under $20,000

How each part of the system works is on the overview page. The step-by-step myTax walkthrough is on the FY2025 page and applies to this year with the changes in section 5.

2. Rates and thresholds

Resident tax rates

Taxable income Tax on this income
$0 to $18,200 Nil
$18,201 to $45,000 16c for each $1 over $18,200
$45,001 to $135,000 $4,288 plus 30c for each $1 over $45,000
$135,001 to $190,000 $31,288 plus 37c for each $1 over $135,000
$190,001 and over $51,638 plus 45c for each $1 over $190,000

Offsets and levies

Item FY2026
Low Income Tax Offset (LITO) Unchanged: $700 up to $37,500, tapering to nil at $66,667
Medicare levy 2% of taxable income
Medicare levy low-income threshold (single) No levy at $28,011 or below. Shades in at 10c per $1 up to $35,013
Medicare levy surcharge (single, no private hospital cover) Nil to $101,000. 1% to $118,000. 1.25% to $158,000. 1.5% above

Study and training loans

Repayment income Compulsory repayment
$67,000 or less Nil
$67,001 to $125,000 15c for each $1 over $67,000
$125,001 to $179,285 $8,700 plus 17c for each $1 over $125,000
$179,286 and above 10% of total repayment income

Super

Item FY2026
Super guarantee rate 12%
Concessional contributions cap $30,000
Carry-forward of unused cap Allowed if total super balance was under $500,000 on 30 June 2025. The unused 2019-20 cap has expired

Deduction rates

Item FY2026
Work from home, fixed rate 70c per hour worked from home
Car, cents per kilometre 88c per km, up to 5,000 km per car
Immediate deduction for work items $300 or less per item
Small business instant asset write-off Assets under $20,000 each, first used or installed between 1 July 2025 and 30 June 2026
GST registration threshold $75,000 turnover
ATO interest charges (GIC, SIC) Not deductible when incurred on or after 1 July 2025, including interest on older debts

3. Calculator

The same illustrative return as on the FY2025 page, run through the FY2026 rules. Replace the inputs in example with your own figures to check the myTax estimate.

# 2025-26 resident individual tax. Illustrative inputs only.
from dataclasses import dataclass

# (top of bracket, marginal rate). Unchanged from 2024-25.
BRACKETS = [
    (18_200, 0.00),
    (45_000, 0.16),
    (135_000, 0.30),
    (190_000, 0.37),
    (float("inf"), 0.45),
]

MEDICARE_RATE = 0.02
MEDICARE_LOWER = 28_011  # single, no SAPTO; the levy shades in at 10c per dollar above this

# Study loans: marginal from 2025-26, charged only on income above the threshold.
STUDY_LOAN_THRESHOLD = 67_000


def income_tax(taxable):
    """Tax before offsets, stepping through each bracket."""
    tax, lower = 0.0, 0.0
    for upper, rate in BRACKETS:
        if taxable <= lower:
            break
        tax += (min(taxable, upper) - lower) * rate
        lower = upper
    return tax


def lito(taxable):
    """Low Income Tax Offset: $700 up to $37,500, then two tapers to nil at $66,667."""
    if taxable <= 37_500:
        return 700.0
    if taxable <= 45_000:
        return 700.0 - (taxable - 37_500) * 0.05
    if taxable <= 66_667:
        return max(0.0, 325.0 - (taxable - 45_000) * 0.015)
    return 0.0


def medicare_levy(taxable):
    if taxable <= MEDICARE_LOWER:
        return 0.0
    return min(taxable * MEDICARE_RATE, (taxable - MEDICARE_LOWER) * 0.10)


def study_loan_repayment(repayment_income):
    ri = repayment_income
    if ri <= STUDY_LOAN_THRESHOLD:
        return 0.0
    if ri <= 125_000:
        return (ri - STUDY_LOAN_THRESHOLD) * 0.15
    if ri < 179_286:
        return 8_700 + (ri - 125_000) * 0.17
    return ri * 0.10


@dataclass
class Return:
    """One year's figures, in dollars."""
    salary: float = 0.0
    contracting: float = 0.0        # fees received in the year
    interest: float = 0.0
    dividends: float = 0.0          # cash amount
    franking_credits: float = 0.0
    trust_income: float = 0.0       # ETF distributions, excluding capital gains
    net_capital_gain: float = 0.0   # after losses and the 50% discount
    other_income: float = 0.0       # e.g. net CFD gains on revenue account
    deductions: float = 0.0
    tax_withheld: float = 0.0       # total on the income statement, incl. any study loan part
    has_study_loan: bool = False

    @property
    def assessable(self):
        return (self.salary + self.contracting + self.interest + self.dividends
                + self.franking_credits + self.trust_income + self.net_capital_gain
                + self.other_income)

    @property
    def taxable(self):
        return max(0.0, self.assessable - self.deductions)

    def summary(self):
        taxable = self.taxable
        before = income_tax(taxable)
        offset = min(before, lito(taxable))
        levy = medicare_levy(taxable)
        # Repayment income also adds reportable super and fringe benefits; none here.
        loan = study_loan_repayment(taxable) if self.has_study_loan else 0.0
        liability = before - offset + levy + loan
        credits = self.tax_withheld + self.franking_credits
        return {
            "assessable income": self.assessable,
            "less deductions": -self.deductions,
            "taxable income": taxable,
            "income tax on the brackets": before,
            "less LITO": 0.0 - offset,
            "plus Medicare levy": levy,
            "plus study loan repayment": loan,
            "total liability": liability,
            "less tax withheld": -self.tax_withheld,
            "less franking credits": -self.franking_credits,
            "owed (negative is a refund)": liability - credits,
        }


def show(r):
    rows = r.summary()
    width = max(len(k) for k in rows)
    for label, amount in rows.items():
        print(f"  {label:<{width}}  {amount:>12,.2f}")
    print(f"  {'average rate on taxable income':<{width}}  "
          f"{(rows['total liability'] - rows['plus study loan repayment']) / rows['taxable income']:>12.1%}")


example = Return(
    salary=60_000,
    contracting=8_000,
    interest=200,
    dividends=1_000,
    franking_credits=428.57,
    deductions=2_000,
    tax_withheld=11_200,
    has_study_loan=True,
)
show(example)
  assessable income               69,628.57
  less deductions                 -2,000.00
  taxable income                  67,628.57
  income tax on the brackets      11,076.57
  less LITO                            0.00
  plus Medicare levy               1,352.57
  plus study loan repayment           94.29
  total liability                 12,523.43
  less tax withheld              -11,200.00
  less franking credits             -428.57
  owed (negative is a refund)        894.86
  average rate on taxable income         18.4%

Against FY2025, the same inputs produce a much smaller study loan repayment: about $94 on the $628 above the threshold, instead of 2.5% of the whole income. Everything else is the same, because the brackets, LITO and the levy rate did not move. The amount owed falls by the same difference.

4. Study loans under the marginal system

From FY2026 the compulsory repayment is charged only on the part of repayment income above $67,000. Under the old system, crossing a threshold by a dollar applied the new rate to the whole income, so a small pay rise could cost hundreds of dollars in extra repayment. The marginal system removes that cliff.

Two practical effects:

  • Below $67,000 there is no compulsory repayment at all. Any study loan amount your employer withheld during the year is still a credit, so it comes back in the refund. Employers moved to new withholding schedules partway through the year, so some withholding early in the year is normal.
  • The 20% cut is separate. It reduced the loan balance itself, as the balance stood on 1 June 2025, and the ATO applied it automatically after the law passed. It does not change this year’s repayment. It changes how many years of repayments remain. Check the new balance in myGov.

The table below shows the repayment on the same income under each year’s rule.

# Study loan repayment on the same repayment income, old system against new.
# 2024-25 rates are copied only where the ATO bands were checked (to $84,107).
OLD_2024_25 = [(54_435, 0.010), (62_851, 0.020), (66_621, 0.025), (70_619, 0.030),
               (74_856, 0.035), (79_347, 0.040)]


def old_repayment(ri):
    rate = 0.0
    for lower, band_rate in OLD_2024_25:
        if ri >= lower:
            rate = band_rate
    return ri * rate


print(f"  {'repayment income':>16}  {'FY2025 rule':>12}  {'FY2026 rule':>12}")
for ri in (55_000, 60_000, 65_000, 67_000, 70_000, 75_000, 80_000, 84_000):
    print(f"  {ri:>16,}  {old_repayment(ri):>12,.2f}  {study_loan_repayment(ri):>12,.2f}")
  repayment income   FY2025 rule   FY2026 rule
            55,000        550.00          0.00
            60,000        600.00          0.00
            65,000      1,300.00          0.00
            67,000      1,675.00          0.00
            70,000      1,750.00        450.00
            75,000      2,625.00      1,200.00
            80,000      3,200.00      1,950.00
            84,000      3,360.00      2,550.00

5. Lodging this year

Follow the FY2025 walkthrough. The personalise screen and the section order are the same. These are the points that differ. Section 6 walks through the screens that need more than the FY2025 page says.

  • Deadline: 31 October 2026 for self-lodgement. A registered agent gets a later date only if you are on their list before then.
  • Depreciation, year 2. Items over $300 bought in FY2025 are claimed again, at a full year’s decline. Take the figures from last year’s schedule, not from scratch.
  • Carried-forward capital loss. Enter last year’s net capital loss in the capital gains section. Use the figure on the FY2025 notice of assessment, not your own estimate.
  • Contracting fees received after 30 June 2025 for work done in FY2025 belong to this year. If FY2025 already counted them by work date, see the TPAR notes in section 6.
  • Do not claim ATO interest. General interest charge and shortfall interest charge incurred in this year are no longer deductible, even when they relate to an older year’s debt.
  • Keep CFD treatment consistent with what you lodged for FY2025. If you change it, amend FY2025 to match.
  • Study loan. Nothing to enter. The ATO applies the marginal rate. If repayment income is $67,000 or less, expect the loan withholding back.
  • Super guarantee at 12% is still not income. It only matters for the concessional cap.

6. The myTax screens in practice

Notes from working through the FY2026 screens. They fill gaps in the FY2025 walkthrough, which lists the categories but not the questions inside them. All amounts here are illustrative.

Personalise: the sub-options

Two categories open a second list once ticked.

Category Sub-option to tick Why
Sole trader or business income Business/Sole trader income or loss, then Personal services income Skills-based contracting that fails the results test is PSI, not business income
Foreign income Other foreign income ETF foreign income and foreign tax paid. The foreign income tax offset then flows from the managed fund pre-fill

Leave Dividends unticked if you only hold ETFs: their payouts are managed fund distributions. Leave Tax losses of earlier income years unticked for a capital loss: that item is for revenue losses, and a capital loss goes in the capital gains section.

An income statement that is not tax ready

Employers must finalise each employee’s income statement by 14 July. When one has not, myTax shows a warning and asks whether to include the statement.

  1. Answer Yes. Answering No drops the employer from the return entirely.
  2. Replace gross payments and tax withheld with the full-year figures from your payslips, in whole dollars. Check first that the statement matches your payslips up to the date it stops, so you know the gap is unreported pays and not a payroll error.
  3. Keep the payslips and bank deposits. The ATO may hold the refund, or amend the return once the employer reports, if the figures differ.

On the same form, a bonus may already sit inside gross (some payroll software labels it overtime), so do not enter it again as an allowance. Reportable employer super contributions means salary sacrifice or voluntary contributions only, never the super guarantee.

Contractor income reported in a TPAR

A business that pays contractors lodges a Taxable payments annual report (TPAR). It appears in the business section as “TPAR Payment: payer” with gross paid, GST and income less GST.

  • Every income type adds the amount. The type list (Business income, PSI, Other income) only labels it. No option leaves it out.
  • Do not also add a payment summary for the same payer. The TPAR row already counts the income, so a second entry doubles it.
  • A wrong GST split is fixed in the PSI section. If you charged no GST but the payer reported some, enter the difference in PSI Other - manually calculated, so net PSI equals the cash you received.
  • The TPAR follows the date the payer paid. If last year’s return counted the same invoice by the date the work was done, the amount is now in both years. Declare it this year to match the ATO’s data, then amend last year to take it out. Counting contract income when it is received, every year, avoids this.

The PSI questions, in order

Question Answer for hourly contracting
Did you receive any personal services income? Yes
Did any activity satisfy the results test? No: paid for time, not for a result
A personal services business determination in force for the whole period? No, unless the ATO issued one
80% or more of PSI from one source? Yes, with a single client
Deduction for payments to associates for principal work 0
Other deductions against PSI Only costs of earning that income. Employee work deductions go in Deductions

Net PSI is read-only: the TPAR or payment summary amount plus any “Other” amount, less deductions. When the small business income tax offset prompt appears, do not claim it: PSI that fails the results test is not small business income.

The capital gains form

The pre-fill lists any carried-forward loss and, for each fund, a total current year capital gain and a smaller net capital gain (after the fund applied the 50% discount). The form itself takes only three totals.

Field What goes in it
Total current year capital gains Each fund’s total figure, not its net one, plus your own gains
Net capital gain What remains after current-year losses, then carried-forward losses, then the discount
Net capital loss carried forward Any loss left over, for next year

Example: own gains of $400, fund totals of $100, and a $1,000 loss carried forward. Total current year capital gains is $500. The loss absorbs all of it, so the net capital gain is $0 and $500 is carried forward. No discount applies, because the losses are used before the discount.

The form has no field for this year’s capital losses. Entering a net figure for a trading account gives the same net gain and carry-forward; the CGT tool takes gains and losses separately if you want them itemised. Completing this section also clears the “errors in this table” flag on the managed fund distributions.

Deductions: entering them, and the high-claims warning

  • Working from home has no type of its own in the other work-related expenses list. Enter it as an other expense with the method and hours in the description, for example WFH FIXED RATE 1500 HRS. Descriptions are cut at about 30 characters, and amounts take no thousands separator.
  • The foreign income tax offset needs its amount typed in. The offsets screen shows total foreign tax paid but leaves the offset amount blank. Up to $1,000 of foreign tax paid, enter the same figure.
  • myTax compares your work-related expenses with others in your occupation. Above the norm, it warns before lodging, and again the next year if a previous return was flagged. It is a prompt, not a block, but it says which returns get reviewed.

Before lodging past that warning, check each line against a document:

Claim Evidence the ATO asks for
Work from home, fixed rate A record of hours actually worked at home (payslips show hours, not where), and one bill for each running cost, such as electricity and internet
Subscriptions The supplier’s invoice, not a bank line, and an honest work-use share. Personal projects are not work
Depreciation The purchase invoice: its real price and its date. An item bought after 30 June belongs to the next year
Small items under $300 The receipt. Identical items bought as a set (two of the same monitor) are tested together, so a set over $300 is depreciated

A claim with no document is better left out and added later by amendment, which is allowed for two years, than defended in a review. Re-check last year’s depreciation schedule against the invoices too: a cost or a purchase date carried forward from an estimate repeats the error every year until it is fixed.

7. Coming in FY2027

These are already law for 1 July 2026 onward and do not affect this year’s return.

  • The 16% rate drops to 15% for income from $18,201 to $45,000 (and to 14% from 1 July 2027).
  • Payday super. Employers must pay super at the same time as wages, instead of quarterly.

References

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