Australia take-home pay for 2026-27: gross to net after tax

The direct answer: the rule and where it comes from

Take-home pay is what is left after tax is withheld from each pay. In Australia the main deductions for a salaried employee are income tax and the Medicare levy. Superannuation is not taken out of the employee's pay. The employer pays it on top of the salary.

The income tax scale for 2026-27 is set by the resident rates the Australian Taxation Office publishes. The change that matters this year comes from the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024. Under that Act, the 16 per cent rate on taxable income between $18,201 and $45,000 falls to 15 per cent from 1 July 2026, and then to 14 per cent from 1 July 2027. The official Budget page sets out the same two steps. The thresholds for the other brackets did not change with this cut.

For 2026-27, the resident scale is therefore: nil up to $18,200; 15% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; and 45% above $190,000. The bracket amounts shown in some sources differ slightly in how the tax on each band is written out, so check the ATO's own table when you need an exact figure for a payslip audit.

The Medicare levy is 2% of taxable income for most residents. Low earners pay a reduced levy or none, because a shade-in applies between a lower and an upper threshold. Two sources in this review give the 2026-27 single threshold as $28,011, but one of them notes that the ATO had not yet published 2026-27 thresholds and that the figures were carried forward from 2025-26. Treat the threshold as provisional until the ATO publishes it. At any salary above the upper shade-in point, the full 2% applies, so the threshold question does not affect the $80,000 example below.

How the figure is worked out, step by step

Most payroll errors come from skipping a step, not from the rates themselves. Work through the steps in this order.

1. Start with the annual gross salary. If you are paid hourly or casually, multiply the hours you expect to work over the year by the rate, and include regular allowances that are taxable.
2. Subtract any amounts that reduce taxable income before tax is worked out, such as pre-tax salary sacrifice or work expense deductions you claim. Most salaried employees have none, so taxable income equals gross salary in the simplest case.
3. Apply the resident scale to taxable income, one band at a time. Each rate applies only to the slice of income inside its band. The 2026-27 tax on the first slice up to $45,000 is 15 per cent of the income above $18,200, and the tax on income above $45,000 is calculated on the higher bands.
4. Subtract the Low Income Tax Offset, if you qualify. This offset is worth up to $700 for taxable income up to $37,500, falls by 5 cents for each dollar above $37,500 until $45,000, then falls by 1.5 cents for each dollar above $45,000 until it reaches nil at $66,667. It reduces the tax itself, not your taxable income. It is worth nothing once your tax before the offset is below the offset amount.
5. Add the Medicare levy at 2% of taxable income, subject to the low-income shade-in.
6. Subtract the total tax from gross salary. Divide the result by 12 for a monthly figure, by 26 for a fortnightly figure, or by 52 for a weekly figure.

The employer's payroll system carries out this calculation pay by pay, using the tax scale and the tax file number declaration the employee has given. Because the calculation is done on each pay, the amount withheld in a single payslip can differ from an exact annual division. The final tax position is confirmed when the return is lodged.

Worked example: $80,000 before and after 1 July 2026

The example assumes a single resident employee with no tax-deductible expenses, no salary sacrifice, no student loan repayments, no private hospital cover issue and a full year of work. The salary is $80,000 a year in both years, so the only thing that changes is the rate on the middle band.

The 2026-27 saving on this salary is $268 a year, which is 1 per cent of the $26,800 width of the 15 per cent band. That is the full extent of the change for anyone earning $45,000 or more. For someone earning less, the saving is smaller, because less of their income sits in that band.

Two points matter when reading this table. First, the Low Income Tax Offset is nil at $80,000, so it does not change the answer here. Second, the Medicare levy is the same in both years because the 2% rate did not change. The employer's super contribution is not in this table. At the 12 per cent superannuation guarantee rate, the employer would pay about $9,600 on top of the $80,000 salary, and that money does not reduce the employee's net pay.

Cases that change the answer

The core calculation works for a typical full-year employee. Several situations move the figure, and this is where a simple calculator often goes wrong.

• Part-year work and mid-year starts or resignations. Tax is worked out on the income you earn in the financial year. If you start or leave part way through the year, the withholding in your pay may not match your final tax, and any difference is settled when you lodge your return. The tax-free threshold applies to the pay you receive from the employer, so the employee should give the employer a correct tax file number declaration on the first day.
• Contract type. Casual, fixed-term and permanent staff are taxed on the same scale, but casual pay often includes a loading and different leave rules, so the gross figure you start with is different. Contractors who invoice as a business are not on payroll at all and work out their own tax on business income.
• Salary sacrifice and deductions. Pre-tax salary sacrifice, such as extra super or a salary packaged item, reduces taxable income. This lowers the tax, but it also lowers the take-home pay in the same pay period because the sacrificed amount no longer reaches the bank account.
• Caps on super. The concessional superannuation contributions cap for 2026-27 is $32,500, according to a secondary calculator source in this review. Contributions above the cap are taxed at the employee's marginal rate. Check the ATO's superannuation pages for the official figure before relying on it.
• Repaying a student loan. Income above a repayment threshold triggers compulsory repayments under the Higher Education Loan Program. A secondary source puts the 2026-27 start point at $69,528. This amount is withheld from pay and must be included in a full take-home calculation for graduates with a loan.
• Medicare levy surcharge. This is an extra 1% to 1.5% for higher earners without appropriate private hospital cover. Secondary calculators place the single base threshold for 2026-27 at $105,000. It does not apply to the $80,000 example. It is worth checking if the salary is close to that level, because the surcharge is charged on income for surcharge purposes, which is wider than salary alone.
• The $1,000 work-related expense deduction. It is described in the 2026 Budget context as starting with the 2026-27 income year. The sources in this review disagree on whether it is final law or still a draft measure, and it is claimed on the tax return, not taken out of pay. Do not add it to a payroll calculation until the ATO's own page confirms its status.
• Residency and visa status. The calculation above applies to Australian residents for tax purposes. Foreign residents and working holiday makers are taxed on different scales and do not get the tax-free threshold in the same way, so a resident calculator will overstate their net pay.

A calculator, including the free calculator on this page, can estimate these figures from the inputs you give. It cannot decide your residency status, whether a payslip is correct, or what your employer's software actually withholds. Those checks need your payslip, your tax file number declaration and, for anything unusual, the ATO or a registered tax agent.

Common mistakes

Most wrong figures come from a small number of errors. The first is using the old 16 per cent rate for a 2026-27 estimate. The rate is 15 per cent on the middle band from 1 July 2026, so the same salary gives a higher net pay than last year's estimate.

The second is treating the Low Income Tax Offset as a deduction. A deduction reduces taxable income, so its value depends on the marginal rate. An offset reduces the tax bill itself, dollar for dollar, up to the amount of tax you owe. A $700 offset is worth $700 of tax, not $700 of income.

The third is forgetting the Medicare levy. Many people compare gross salary with the income tax table and then wonder why net pay is lower than expected. Add the 2% levy to every estimate unless the reduced levy or an exemption clearly applies.

The fourth is adding superannuation to take-home pay. The super guarantee is paid by the employer, so it is extra to the salary, not a deduction from it. Mixing the two overstates net pay by roughly the super amount.

The fifth is dividing annual net pay by 12 when the pay cycle is fortnightly or weekly. The result is a monthly or weekly average that does not match a payslip if the pay has a different number of weeks in a month. Use 26 pays for a fortnightly figure and 52 for a weekly figure.

What to check with HR or a lawyer

Start with your payslip. It should show gross pay, tax withheld, any super, and any other deductions. If the tax withheld does not look close to the rates above for your salary, ask the payroll team which tax scale and tax file number declaration they used. Check that the employer has the right tax residency status, and that any salary sacrifice or student loan deduction is correct.

For an employer or payroll lead, the question is different. Confirm that payroll software has the 2026-27 scale loaded from 1 July 2026, including the 15 per cent rate. Ask whether the software applies the Low Income Tax Offset and the Medicare levy shade-in correctly. If the business is considering reducing pay, hours or roles to offset costs, the notice, consultation and severance rules that apply under Australian employment law must be followed, and the change should be agreed with the employee or checked with a lawyer.

Check the ATO's own pages before relying on any figure in this guide. The rates, thresholds, offsets and surcharge tiers are set by law and can be amended. This explains the rule in general terms; it is not legal or tax advice for your case.

Many employers now use AI workers to handle the routine checking around payroll. A software worker can compare each pay run against the rates in force, flag payslips where the tax withheld looks out of line with gross pay, prepare the reconciliation between payroll and the general ledger, and route exceptions to a payroll officer. A person still approves the pay run, decides on unusual cases, and handles any employee query.