Short answer
Your Australian tax refund (or balance owing) is calculated as:
```
Refund (or balance owing) =
Tax already withheld during the year (PAYG)
- Tax owed on your taxable income
+ Tax offsets (LITO, etc.)
- Medicare Levy (and Surcharge if applicable)
- HECS-HELP repayment (if applicable)
```
Use AusTax AI's refund calculator for a precise FY2025-26 estimate that handles all the offsets, surcharges, and HECS automatically.
This guide gives you the rough rules so you understand what's happening in the calculation.
FY2025-26 tax brackets (resident individuals)
| Income | Tax rate (on amount over threshold) | Total tax at threshold |
|---|---|---|
| $0 - $18,200 | 0% (tax-free threshold) | $0 |
| $18,201 - $45,000 | 16% | $4,288 |
| $45,001 - $135,000 | 30% | $31,288 |
| $135,001 - $190,000 | 37% | $51,638 |
| $190,001+ | 45% | — |
Quick examples
| Taxable income | Tax payable (before offsets/levies) |
|---|---|
| $30,000 | $1,888 |
| $50,000 | $5,788 |
| $80,000 | $14,788 |
| $100,000 | $20,788 |
| $150,000 | $36,838 |
Medicare Levy
Add 2% of taxable income to your tax bill (with phase-in for very low income; exemption available for 482 visa holders without Medicare).
Example: $80,000 income → $1,600 Medicare Levy on top of $14,788 tax → $16,388 total.
Medicare Levy Surcharge (MLS)
If you don't have private hospital cover AND your income exceeds $101,000 (single):
| Single income | MLS Rate |
|---|---|
| $101,001 - $118,000 | 1% ($1,010-1,180) |
| $118,001 - $158,000 | 1.25% ($1,475-1,975) |
| $158,001+ | 1.5% |
Family thresholds higher; check ATO (ATO guidelines) for current figures.
Low Income Tax Offset (LITO)
Automatic credit — reduces your tax bill (doesn't refund as cash if you owe nothing).
| Income | LITO |
|---|---|
| $0 - $37,500 | $700 (full) |
| $37,501 - $45,000 | Phases out ($700 - 5¢ per $ over $37,500) |
| $45,001 - $66,667 | Phases out further (1.5¢ per $ over $45,000) |
| $66,667+ | $0 |
LITO is automatically applied — no need to claim.
HECS-HELP repayment
If you have a HELP debt, repayment is compulsory once your repayment income exceeds $67,000 (FY2025-26 threshold).
| Repayment income | Repayment calculation |
|---|---|
| $0 – $67,000 | Nil |
| $67,001 – $125,000 | 15c for each $1 over $67,000 |
| $125,001 – $179,285 | $8,700 + 17c for each $1 over $125,000 |
| $179,286 and over | 10% of total repayment income |
From FY2025-26, repayment is marginal — only the income above $67,000 (not your total income).
Important: HECS is based on gross income (before deductions). So claiming deductions doesn't reduce your HECS — only reduces your income tax.
Putting it together: example calculation
Scenario: $85,000 PAYG salary, $2,000 work-related deductions, has HELP debt, no private health.
| Step | Amount |
|---|---|
| Gross income | $85,000 |
| Less deductions | -$2,000 |
| Taxable income | $83,000 |
| Tax on $83,000 | $15,688 |
| Less LITO (phase-out: 0) | 0 |
| Plus Medicare Levy (2%) | +$1,660 |
| Plus MLS (under threshold of $101,000) | 0 |
| Plus HECS (gross $85,000, marginal: 15c over $67k) | +$2,700 |
| Total tax bill | $20,048 |
| Less PAYG withheld during year (typical 25% rate) | -$21,250 |
| = Balance (refund) | -$1,202 |
Add deductions or take out private hospital cover above $101k → increases your refund.
What makes the calculator complicated
- LITO phase-out math (two-tier)
- Medicare Levy thresholds + family + dependents
- MLS family vs single thresholds
- HECS sliding scale (20+ bands)
- Working Holiday Maker (WHM) tax rates (different from resident rates)
- Tax offsets (zone, dependent spouse, etc. for specific circumstances)
- CGT 50% discount eligibility
- Franking credit refunds
Manually doing this calculation is error-prone. Use AusTax AI's calculator which handles all the above automatically.
Need Help With Your Tax Return?
Complex situation? a registered tax agent (see the directory) Our partner agents review every detail for accuracy and compliance.
*Disclaimer: This is general information only and does not constitute personal tax advice. Consult a registered tax agent for advice tailored to your specific situation. Always verify against the latest ATO guidelines at ato.gov.au.*
When you should use a Tax Agent vs DIY
DIY estimate via calculator → lodge in myTax: fine for standard PAYG employees with simple deductions.
Use a Tax Agent if:
- You have CGT events, foreign income, business income, or rental property
- Complex offsets (zone allowance, dependent spouse offset, foreign income tax offsets)
- Mid-year visa or residency change
- You want to optimise super salary sacrifice / pre-EOFY contributions
Need a professional? Browse every TPB-registered tax agent near you in the AusTax directory, or post a request and matching practices will contact you — free.
See main decision guide for the broader framework.
This is general information only. Calculator results are estimates — your actual refund depends on data the ATO has, which you should review in myTax before lodging.