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)
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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