How much tax do you pay on $120,000 a year in Australia? (FY2025-26)
On a $120,000 taxable income for FY2025-26, a single resident pays approximately $28,788 income tax plus $2,400 Medicare Levy, taking home about $88,800. Without private hospital cover the 1% MLS adds another $1,200, dropping take-home toward $87,600 and making PHI close to mandatory at this income.
Annual take-home
$90,812
Effective tax rate: 24.3%
Annual total tax
$29,188
Marginal rate: 30.0%
Tax breakdown (annual)
- Gross income
- $120,000
- Taxable income
- $120,000
- Income tax (Stage 3 brackets)
- $26,788
- Net income tax
- $26,788
- Medicare Levy (2%)
- $2,400
- Total taxes
- $29,188
- Annual take-home
- $90,812
Default scenario: single filer, has appropriate private hospital cover, no HECS. If you have HECS or no private health cover, use our main calculator for the full picture.
Who earns $120,000?
A $120,000 salary is typical for experienced corporate managers, senior nurses including Nurse Unit Managers, mid-career engineers, IT specialists with 8-10 years' experience, and self-employed tradies running steady operations. You sit comfortably inside the 30% bracket but firmly in MLS Tier 1 ($118,001-$158,000 attracts 1.25% on $120k since $118k is the upper edge of Tier 0 — actually $120k attracts the 1.0% Tier 1 rate). The big planning lever is super: $5,000-$15,000 of concessional contributions saves you 17 cents per dollar at this marginal rate, while still leaving headroom under the $30,000 cap.
Deduction tips at this income level
- 1Hold continuous private hospital cover for the full 365 days to wipe the $1,200 MLS hit — a basic policy still pays for itself.
- 2Bunch deductible expenses into the same financial year (subscriptions, courses, work tools) to stay under MLS thresholds where possible.
- 3Salary sacrifice $10,000-$15,000 to super at 30% marginal rate — net cost is only 70 cents per dollar versus 85 cents post-tax.
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Frequently asked questions
What is the take-home pay on a $120,000 salary in Australia for FY2025-26?
A single Australian resident earning $120,000 in FY2025-26 with no HECS and no private hospital cover takes home approximately $87,612 after $28,788 income tax, $2,400 Medicare Levy and $1,200 Medicare Levy Surcharge. With private hospital cover removing the MLS, take-home rises to about $88,812. Add HECS at the $120k band of roughly 6% and you lose another $7,200, dropping net pay to around $80,400. Each $1,000 of legitimate deductions returns $320 because you're taxed at 32% marginal rate.
How does the Medicare Levy Surcharge work at $120,000?
The Medicare Levy Surcharge applies to individuals earning above $101,000 with no eligible private hospital cover for FY2025-26. At $120,000 you fall into MLS Tier 1, which charges 1.0% of taxable income — about $1,200 a year. To avoid it you must hold an Australian-registered hospital policy with an excess no greater than $750 for singles. Extras-only cover does not qualify. Premiums for basic hospital cover typically run $1,000-$1,400 a year, so the break-even decision is closer than at $100k but PHI still usually wins on lifetime healthcare value.
Should I salary sacrifice into super at $120,000?
Yes, salary sacrifice is highly tax-efficient at this income. Your marginal rate is 32% (30% income tax + 2% Medicare), so every dollar sacrificed into super saves 17 cents compared to the 15% contributions tax inside the fund. Employer SG (12% from 1 July 2025 — final legislated rate) on a $120,000 base is about $14,400, leaving roughly $15,600 of headroom under the $30,000 concessional cap. Sacrificing $10,000-$15,000 a year is usually safe, accelerates retirement savings, and may also reduce your MLS exposure if it pushes taxable income below the $101,000 threshold.
Authoritative sources
All rates and thresholds on this page are sourced from the Australian Taxation Office (ATO).
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