Australian Tax Rates 2025--26: Every Tax Bracket, Super Cap and Key Threshold You Need to Know

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By Trinity Accounting Practice | Beverly Hills, Sydney NSW

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The 2025--26 financial year brings meaningful changes across individual income tax, superannuation, and corporate taxation --- and getting the numbers right matters whether you are an employee, a business owner, or an SMSF trustee.

This guide from Trinity Accounting Practice brings together every key ATO-confirmed threshold for the year ending 30 June 2026, including the updated income tax rate brackets, the new 16% marginal rate, superannuation contribution caps, the current super guarantee rate, Medicare levy thresholds, company tax rates, and the Division 7A benchmark interest rate.

Bookmark this page --- and if you need personalised advice on how any of these changes affect your specific situation, book a consultation with our team at Beverly Hills.

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Section 1: Individual Income Tax Rates 2025--26

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Resident Individual Tax Brackets

The income tax brackets for Australian residents have been restructured for 2025--26 following the Stage 3 tax cuts. The new 16% marginal rate on income between $18,201 and $45,000 is the most significant change for low-to-middle income earners.

The following rates apply for the year ending 30 June 2026. Note: the 2% Medicare Levy is additional and applies separately.

Taxable IncomeTax on Base AmountMarginal Rate (on excess)$0 -- $18,200NilNil$18,201 -- $45,000Nil16%$45,001 -- $135,000$4,28830%$135,001 -- $190,000$31,28837%$190,001 and over$51,63845%

📎 ATO Reference: Individual income tax rates

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Non-Resident Tax Rates 2025--26

Non-residents are not entitled to the tax-free threshold and are taxed at the following rates:

Taxable IncomeMarginal Rate$0 -- $135,00030%$135,001 -- $190,00037%$190,001 and over45%

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Working Holiday Maker Tax Rates

Working holiday makers (visa subclasses 417 and 462) are taxed at 15% on the first $45,000 of income earned in Australia, then at the foreign resident rates above $45,000. If you are a working holiday maker, ensure your employer classifies you correctly so the right tax rate is applied from your first payslip.

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Section 2: Tax Offsets and Medicare Levy

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This section explains tax offsets and medicare levy thresholds for 2025--26 and how they interact with your income level.

Low Income Tax Offset (LITO)

The Low Income Tax Offset (LITO) reduces the income tax payable for lower-income earners. For 2025--26:

• Maximum offset: $700 (available for taxable income up to $37,500)
• Phases out between $37,500 and $45,000 at a rate of 5 cents per dollar
• Further reduces between $45,001 and $66,667 at 1.5 cents per dollar
• Zero for taxable income of $66,668 or more

LITO is applied automatically by the ATO --- you do not need to claim it separately.

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Medicare Levy Thresholds 2025--26

The standard Medicare Levy is 2% of your taxable income. However, low-income earners may be entitled to a reduction or exemption:

CategoryLower Threshold (No Levy)Upper Threshold (Full Levy Applies)Individuals$27,222$34,028Families$45,907$57,384SAPTO recipients (singles)$43,846$54,808

📎 ATO Reference: Medicare Levy --- low income earners

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Medicare Levy Surcharge (MLS)

Higher-income earners without appropriate private hospital cover are subject to the Medicare Levy Surcharge in addition to the standard 2% Medicare Levy:

Income (Singles)Income (Families)Surcharge Rate$101,001 -- $118,000$202,001 -- $236,0001.0%$118,001 -- $144,000$236,001 -- $288,0001.25%$144,001 and over$288,001 and over1.5%

Taking out private hospital cover above the relevant threshold can eliminate this surcharge and is often the more cost-effective option.

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Section 3: Superannuation --- Rates, Caps and Thresholds for 2025--26

Superannuation Guarantee (SG) Rate

The Superannuation Guarantee rate for 2025--26 is 12.0% of an employee's ordinary time earnings (OTE). This is the employer's mandatory minimum contribution.

• Maximum quarterly earnings base: $62,500 (meaning the maximum quarterly SG obligation per employee is $7,500)
• Failure to pay SG on time results in the Super Guarantee Charge (SGC) --- which is non-deductible and includes interest and an administration component

📖 Related reading: Understanding the Super Guarantee Charge (SGC) Statement

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Superannuation Contribution Caps 2025--26

Exceeding these caps triggers additional tax --- so knowing the limits is essential for both individuals and employers.

Contribution Type2025--26 CapKey NotesConcessional (Pre-Tax)$30,000 Includes employer SG contributions + salary sacrifice. Taxed at 15% inside super (or 30% via Division 293 if income exceeds $250,000)Non-Concessional (After-Tax)$120,000Bring-forward rule allows up to $360,000 over three years if eligible

📎 ATO Reference: Super contribution caps

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Carry-Forward Concessional Contributions

If your Total Superannuation Balance (TSB) was below $500,000 at 30 June of the previous financial year, you can carry forward any unused portion of your concessional contributions cap from the prior five years and use it in a single year. This is a powerful strategy for those who have had career breaks, taken parental leave, or had periods of lower income.

📖 Speak to our team about whether a catch-up contribution strategy is right for you: Book a consultation

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Transfer Balance Cap and Total Superannuation Balance

Cap2025--26 LimitPurposeTransfer Balance Cap (TBC)$2.0 million Maximum amount transferable into the tax-free Retirement PhaseTotal Superannuation Balance (TSB)$2.0 millionAffects eligibility for non-concessional contributions and carry-forward rules

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Division 293 Tax --- High Income Super

If your income plus concessional super contributions exceed $250,000 , the ATO imposes an additional 15% tax on your concessional contributions through Division 293. This effectively brings the tax on those contributions up to 30% --- the same as the top corporate rate.

📖 Related reading: Division 293 Tax --- What High Income Earners Need to Know

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Preservation Age and Accessing Super

The preservation age --- the earliest age at which you can access your super without meeting a condition of release --- is now 60 for all Australians born on or after 1 July 1964.

For those aged 60 and over , income streams and lump sums from a taxed super fund are generally tax-free (non-assessable, non-exempt income).

📖 If you have an SMSF: SMSF Accounting and Compliance Sydney

📖 Also see: How to Set Up Your SMSF

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Section 4: Business and Corporate Tax Rates 2025--26

Company Tax Rates

Company TypeTax RateEligibilityBase Rate Entity25% Aggregated turnover under $50 million AND no more than 80% of assessable income is passive (dividends, rent, interest)**All Other Companies30%**All companies not meeting Base Rate Entity conditions

The maximum franking rate that can be attached to dividends reflects the rate of tax paid by the company --- 25% for Base Rate Entities and 30% for all others.

📖 Related reading: Accounting and Taxation Services --- Trinity Accounting Practice

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Instant Asset Write-Off 2025--26

Small businesses with an aggregated turnover below $10 million can immediately deduct the full cost of eligible assets costing less than $20,000 , provided the asset is first used or installed ready for use before 30 June 2026.

This is one of the most valuable concessions currently available to small business --- and the deadline is approaching.

📖 Full guide: $20,000 Instant Asset Write-Off --- What Small Businesses Need to Know

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Motor Vehicle Depreciation Cost Limit 2025--26

The luxury car depreciation cost limit --- the maximum vehicle cost that can be used when calculating depreciation --- is $69,674 for 2025--26. Any amount paid above this cap cannot be depreciated for income tax purposes.

📖 Related reading: Maximising Motor Vehicle Tax Deductions in Australia

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Section 5: Division 7A and FBT --- Key Rates for 2025--26

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Division 7A Benchmark Interest Rate

The Division 7A benchmark interest rate for 2025--26 is 8.37%.

This rate is critical for any loan agreement between a private company and a shareholder or their associate. If the loan does not carry at least this interest rate and is not on compliant terms, it may be treated as an unfranked deemed dividend --- creating a significant and unexpected taxable income event.

📖 Related reading: Understanding Division 7A Loans

📎 ATO Reference: Division 7A --- loans by private companies

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Fringe Benefits Tax (FBT) 2025--26

The FBT rate for the FBT year ending 31 March 2026 remains at 47% --- aligned with the top marginal income tax rate plus Medicare Levy.

Key FBT thresholds and rates to know:

• FBT rate: 47%
• Gross-up rate (Type 1 --- GST-creditable benefits): 2.0802
• Gross-up rate (Type 2 --- non-GST benefits): 1.8868
• FBT exempt threshold (minor benefits): Less than $300 (per benefit, where irregular and infrequent)

📖 Related reading: How Fringe Benefits Tax (FBT) Applies to Cars in Australia

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Section 6: PAYG Withholding and Instalments

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PAYG Withholding

Employers are required to withhold tax from employee wages and remit it to the ATO through the PAYG Withholding system. Withholding rates are updated with the new tax brackets effective from 1 July 2025.

It is important to ensure your payroll software has been updated to reflect the 2025--26 tax tables to avoid over- or under-withholding.

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PAYG Instalments

If your most recent tax liability was $1,000 or more and your income is above the relevant threshold, the ATO may require you to pay PAYG instalments throughout the year --- rather than a large lump sum at tax time.

📖 Related reading: Starting PAYG Instalments

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What These Changes Mean for You

The restructured tax brackets, increased super caps, and updated thresholds create both compliance obligations and planning opportunities for 2025--26:

• Employees earning between $18,201 and $45,000 benefit most from the new 16% rate
• Business owners should review payroll settings to reflect updated withholding tables
• Super savers with TSB below $500,000 should consider catch-up concessional contributions
• Company directors with loans from their company must ensure Division 7A compliance at the 8.37% rate
• SMSF trustees approaching the $2 million transfer balance cap should plan their retirement phase strategy carefully
• All businesses should consider the instant asset write-off before 30 June 2026
• Low-income earners should review eligibility for tax offsets and medicare levy reductions

📖 Related reading: Why Tax Planning Matters More Than Ever in 2025

📖 Also read: Business Tax Deduction Checklist for 2025

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Speak With a Tax Specialist in Sydney

Understanding the numbers is the first step. Knowing how to apply them to your specific situation --- your income, your business structure, your super balance, your family circumstances --- is where specialist advice makes a real difference.

Trinity Accounting Practice has been helping individuals, business owners, and SMSF trustees across Sydney navigate Australian tax law since 2003.

Our services include:

• Accounting and Taxation --- Tax returns for individuals, companies, trusts, and partnerships
• SMSF Accounting Sydney --- Compliance, reporting, and strategy for self-managed super funds
• Business Advisory --- Tax planning, structure reviews, and cash flow strategy
• Virtual CFO Services --- Strategic financial management for growing businesses and not-for-profits

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Book a Consultation

Trinity Accounting Practice

📍 159 Stoney Creek Road, Beverly Hills NSW 2209

📞 02 9543 6804

🌐 www.trinitygroup.com.au

📅 Book an Appointment with Ramy Hanna

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Also From Trinity Group

🔹 Virtual CFO Services --- Strategic financial management for growing businesses and not-for-profits: vcfoaus.au

🔹 Nexus Wealth Partners --- Home loans, refinancing, and business finance: nexuswealth.au

Disclaimer: This article provides general information only and does not constitute professional tax advice. Tax laws are complex and subject to change. Always consult with a qualified registered tax agent regarding your specific business circumstances before making financial decisions based on tax considerations.

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Q&A

Question: What are the new resident income tax brackets for 2025–26, and does the Medicare Levy apply on top?

Short answer: For Australian residents in 2025–26, taxable income is taxed at:

• $0–$18,200: Nil
• $18,201–$45,000: 16%
• $45,001–$135,000: $4,288 plus 30% of the excess
• $135,001–$190,000: $31,288 plus 37% of the excess
• $190,001 and over: $51,638 plus 45% of the excess The 2% Medicare Levy is separate and applies in addition to the above rates (subject to low-income reductions).

Question: Am I eligible for the Low Income Tax Offset (LITO) in 2025–26 and do I need to claim it?

Short answer: LITO is automatic—no separate claim is required. The maximum offset is $700 for taxable income up to $37,500. It phases out:

• At 5 cents per dollar from $37,500 to $45,000
• Then at 1.5 cents per dollar from $45,001 to $66,667 It is nil from $66,668 of taxable income and above.

Question: How do the Medicare Levy and the Medicare Levy Surcharge (MLS) work this year?

Short answer:

• Medicare Levy: Standard rate is 2% of taxable income. Low-income thresholds for a reduction/exemption are:
  • Individuals: No levy below $27,222; full 2% applies from $34,028+
  • Families: No levy below $45,907; full 2% applies from $57,384+
  • SAPTO recipients (singles): No levy below $43,846; full 2% applies from $54,808+
• MLS: Applies if your income is above the threshold and you don’t have appropriate private hospital cover:
  • Singles: $101,001–$118,000 = 1.0%; $118,001–$144,000 = 1.25%; $144,001+ = 1.5%
  • Families: $202,001–$236,000 = 1.0%; $236,001–$288,000 = 1.25%; $288,001+ = 1.5% Taking out appropriate private hospital cover can eliminate the MLS.

Question: What are the key super settings for 2025–26 (SG rate, contribution caps, and strategies)?

Short answer:

• Superannuation Guarantee (SG): 12.0% of ordinary time earnings; maximum quarterly earnings base $62,500 (max SG $7,500 per quarter). Late/underpayments attract the non-deductible Super Guarantee Charge.
• Contribution caps:
  • Concessional (pre-tax): $30,000 (includes employer SG and salary sacrifice). Taxed at 15% in super (30% via Division 293 if income plus concessional contributions exceed $250,000).
  • Non-concessional (after-tax): $120,000, with bring-forward up to $360,000 over three years if eligible.
• Carry-forward concessional contributions: If your Total Super Balance was under $500,000 at the previous 30 June, you can use unused concessional cap amounts from the past five years.
• Transfer Balance Cap and Total Super Balance: Both $2.0 million.
• Access and tax: Preservation age is 60; from age 60, payments from a taxed super fund are generally tax-free.

Question: What is the Division 7A benchmark interest rate for 2025–26 and why does it matter?

Short answer: The Division 7A benchmark interest rate is 8.37% for 2025–26. Loans from a private company to a shareholder or their associate must meet Division 7A requirements—including at least this interest rate and compliant terms—to avoid being treated as an unfranked deemed dividend, which can create unexpected taxable income.

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