The Stage 3 tax cuts that came into effect in July 2024 restructured Australian tax brackets — reducing the 19% rate, cutting the 32.5% bracket, and eliminating the 37% bracket for income between $120,001–$180,000. Understanding the new structure helps with planning.
Australian income tax brackets 2026/27
| Taxable income | Tax rate |
|---|---|
| $0 – $18,200 | Nil (tax-free threshold) |
| $18,201 – $45,000 | 16% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
Plus Medicare Levy of 2% on most taxable income.
The Medicare Levy Surcharge (MLS)
Singles earning above $93,000 (couples $186,000) without private hospital cover pay an additional 1-1.5% Medicare Levy Surcharge. For many in this income range, private hospital cover (from ~$1,500-2,500/year) is cheaper than the MLS.
Key tax deductions for Australian employees
- Work-related expenses: Tools, equipment, uniforms (not conventional clothing), training directly related to your current job
- Home office expenses: The ATO fixed rate (67c/hour worked from home in 2026) or actual cost method
- Vehicle expenses: If you use your car for work (not commuting), cents per km (88c/km in 2026) or logbook method
- Self-education: Courses directly related to improving skills for your current job (not a career change)
- Donations: To DGR (Deductible Gift Recipients) charities — fully deductible
- Income protection insurance premiums (if paid outside super)
Track your budget in Australian dollars
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