Income tax - Moneysmart.gov.au (2024)

You usually have to pay tax when you earn money from employment, pensions, government payments, investments, and foreign sources.

The amount you pay depends on how much you earn, and any deductions you can claim or offsets you're entitled to.

If you're an employee, your employer will deduct tax from each pay and send it to the Australian Taxation Office (ATO) on your behalf.

If you're self-employed, you need to set aside and pay the money yourself.

At the end of each financial year, most people need to lodge a tax return with the ATO. You can do it yourself through ATO online services, your myGov account, or with the help of an accountant or tax agent.

Calculate how much tax you'll pay

In Australia, income is taxed on a sliding scale.

The Australian Government has made changes to individual income tax rates and thresholds from 1 July 2024. For most taxpayers, this means you will pay less tax each payday and keep more of what you earn. The changes will not affect your 2023-24 tax return.

For details, see individual income tax rates and threshold changes on the ATO website.

Tax rates 2023-24

The table below shows 2023-24 income tax rates for Australian residents aged 18 and over. It does not include the Medicare levy of 2%.

Taxable income	Tax on this income
0–$18,200	Nil
$18,201–$45,000	19c for each $1 over $18,200
$45,001–$120,000	$5,092 plus 32.5c for each $1 over $45,000
$120,001–$180,000	$29,467 plus 37c for each $1 over $120,000
$180,001 and over	$51,667 plus 45c for each $1 over $180,000

This means if you earned $60,000 during the 2023-24 tax year, your tax would be calculated like this:

Tax rates 2024-25

The table below shows 2024-25 income tax rates for Australian residents aged 18 and over. It does not include the Medicare levy of 2%.

Taxable income	Tax on this income
0–$18,200	Nil
$18,201–$45,000	16c for each $1 over $18,200
$45,001–$135,000	$4,288 plus 30c for each $1 over $45,000
$135,001–$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

Medicare levy and surcharge

Most people pay a Medicare levy, which is 2% of your taxable income. The levy is charged as part of your yearly income tax assessment.

If you're on a lower income, your levy may be reduced, or you may not have to pay it at all.

For details, see Medicare levy on the ATO website.

You may also have to pay a Medicare levy surcharge of between 1.0% and 1.5% of your taxable income if:

you, and your spouse and dependent children (if any), don't have a certain level of private health insurance
your family income is above a certain amount

For details, see Medicare levy surcharge on the ATO website.

Use the income tax calculator

Work out what your take-home pay will be after tax and the Medicare levy.

Your taxable income

Your taxable income is the income you must pay tax on. It includes your income, less your tax deductions.

Income that is taxable

Income that you must pay tax on includes money from:

employment (including cash payments and tips)
pensions and annuities
most government payments
investments
capital gains
some grants and payments
income from trusts, partnerships or businesses
foreign sources

The ATO has more information on income you must declare in your tax return.

Income that is not taxable

You will not have to pay tax on:

lottery winnings and other prizes
some government grants and payments
child support
the tax-free portion of your redundancy payment
government super co-contributions

The ATO has more details on amounts not included as income.

Reducing the tax you pay

You may be able to reduce the amount of tax you pay if:

you're entitled to tax deductions or offsets, or
you choose to salary package (salary sacrifice)

Tax deductions

Tax deductions can help to reduce your taxable income.

Common tax deductions include:

work-related expenses
union fees
charitable donations
the cost of managing your tax affairs (for example, paying an accountant)

For details, see deductions you can claim on the ATO website.

Tax offsets

Tax offsets, also known as rebates, directly reduce the amount of tax payable. They are applied after the tax has been calculated.

Common tax offsets include offsets for:

low-income earners
caring for an invalid relative
seniors and pensioners
the taxable portion of a superannuation income stream

To find out more, see tax offsetson the ATO website.

Salary packaging

Salary packaging (or 'salary sacrificing') is when you 'package' your income into salary and benefits. For example, you may arrange to receive less salary in exchange for superannuation or car payments.

If you reduce your salary in this way, you can reduce your taxable income. The items or services you get through salary packaging cannot be claimed as a deduction.

For more information, see salary packaging.

Where to get help with tax

Individual income tax can be complex, and everyone's situation is different.

If you want to get professional advice, consider choosing an accountant to help manage your tax and lodge your tax return.

ATO's Tax Help program

If you earn $60,000 or less you may be eligible for the ATO's Tax Help program.

Tax Help is a free and confidential service that runs from July to October each year. The ATO's trained volunteers help you lodge your tax return online, by phone, or in person at a Tax Help centre.

National Tax Clinic program

If you're not eligible for Tax Help, or need help with returns from previous years, you may be able to get free support through the National Tax Clinic program.

The program is a government-funded initiative to help those who may not be able to afford professional tax advice. You can find your nearest tax clinic on the ATO website.

Taxable income	Tax rate	Tax payable
$18,200	x nil	= $0
$26,800 (income between $18,200 and $45,000)	x 19c	= $5,092
$15,000 (income between $45,000 and $60,000)	x 32.5c	= $4,875
$60,000		$9,967