Australia has a progressive tax system, this is to mean that the more income you earn, the more you pay as tax. In other words the tax rate increases as your taxable income increases.
Tax brackets show the tax rate you will pay on each portion of your income. Incomes are grouped within a range and a rate is applied to everyone that falls within the range.
The current federal tax brackets for the 2022-2023 financial year are as follows:
If you earn from 0$ to $18,200 in Australia, you pay absolutely nothing on your income as Tax.
- Taxable income up to $18,200: Tax-free
- Taxable income between $18,201 and $37,000: 19%
- Taxable income between $37,001 and $90,000: 32.5%
- Taxable income between $90,001 and $180,000: 37%
- Taxable income above $180,000: 45%
Tax brackets 2022-2023
| 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 |
It’s important to note that these tax brackets include the 2% Medicare Levy, which is a mandatory tax in Australia that helps fund the country’s public healthcare system.