Australia · 2026-27
The $18,200 tax-free threshold, 2026-27
The tax-free threshold is the $18,200 of a resident's yearly income taxed at nil. Claiming it on your tax file number declaration lowers the tax withheld from your pay: the ATO puts it at $350 a week, $700 a fortnight or $1,517 a month. You can claim it from one payer at a time.
What the first $18,200 is worth
Without a threshold, the first $45,000 of income taxed at the 15% rate would cost $6,750.00. With the threshold, the assessed tax on $45,000 is $4,020.00: $2,730.00 less, which is 15c on the $18,200 that falls in the nil band. That $2,730.00 is the most the threshold can ever be worth to one person in a year.
| Salary | Tax on the rates | Tax if the first $18,200 were taxed at 15c |
|---|---|---|
| $20,000 | $270.00 | $3,000.00 |
| $30,000 | $1,770.00 | $4,500.00 |
| $40,000 | $3,270.00 | $6,000.00 |
| $60,000 | $8,520.00 | $11,250.00 |
| $90,000 | $17,520.00 | $20,250.00 |
See what the offset and levy do on top in the low income tax offsetguide, and the full set of bands in tax rates.
Questions
Should I claim the tax-free threshold?
If you are an Australian resident, the ATO says you can claim it each income year, and claiming reduces the tax withheld from your income. If you have more than one payer at once, claim it from only one of them, usually the one paying the most.
What happens on a second job?
Tell the second payer to withhold at the "no tax-free threshold" rate. If you claim the threshold from two payers and your total income is over $18,200, too little tax may be withheld and you can receive a tax bill when you lodge your return, due as a lump sum.
Does it make my annual tax lower?
Not in the tax return: every resident gets the $18,200 nil band when the tax is assessed, whichever way the declaration was filled in. What the declaration changes is how much is taken from each payslip along the way. The assessed tax on $45,000 is $4,020.00 either way.
What if I am a resident for only part of the year?
The ATO says a resident for part of the income year receives a part-year tax-free threshold. This site models a resident for the whole year and does not work out the part-year amount.
More Australian guides
Estimates for the 2026-27 financial year using rates read from the ATO on 2026-10-03. Assumes an Australian resident for the whole year. Not payroll, tax or financial advice.