ATO Salary Guide: Take-Home Pay After Tax and Medicare for 2026–27

Understanding Your ATO Salary and Take-Home Pay

When you see a salary figure in a job advertisement, it’s usually your gross pay before tax and the Medicare levy. What actually lands in your bank account each fortnight is your take-home pay, and the Australian Taxation Office (ATO) sets the rules for how much is withheld. This guide explains the 2026–27 ATO salary tax rates, the Medicare levy, and how your pay compares to national benchmarks like the minimum wage and full-time ordinary time earnings.

ATO Salary Tax Rates for 2026–27

The ATO has published updated resident tax rates for the 2026–27 income year, effective from 1 July 2026. These rates apply to Australian residents who are entitled to the full tax-free threshold. The rates are:

• $0 – $18,200: Nil
• $18,201 – $45,000: 15 cents for each $1 over $18,200
• $45,001 – $135,000: $4,020 plus 30 cents for each $1 over $45,000
• $135,001 – $190,000: $31,020 plus 37 cents for each $1 over $135,000
• $190,001 and over: $51,370 plus 45 cents for each $1 over $190,000

These rates do not include the Medicare levy of 2%. The ATO also provides a Tax withheld calculator to help employers and employees estimate the correct withholding for each pay period. The calculator accounts for income tax, Medicare levy, study and training support loans, and tax offsets.

Medicare Levy and Thresholds

Every Australian resident pays the Medicare levy at 2% of taxable income, unless your income is below certain thresholds. For the 2026–27 year, the ATO’s single-person thresholds are $28,011 (lower) and $35,013 (upper). If your taxable income is below $28,011, you pay no Medicare levy. Between $28,011 and $35,013, you pay 10 cents for each dollar over the lower threshold. Above $35,013, you pay the full 2%. These thresholds are important when estimating your take-home pay, especially if you earn close to the minimum wage.

Low Income Tax Offset (LITO)

The Low Income Tax Offset can reduce the tax you owe. For 2026–27, the maximum offset is $700 for taxable incomes up to $37,500. It then reduces by 5 cents per dollar until $45,000, and then by 1.5 cents per dollar until it phases out at $66,667. The offset cannot reduce your tax below zero. This means a worker on the national minimum wage of $52,255 may still receive a partial LITO, lowering their effective tax rate.

Benchmarks: Minimum Wage vs Full-Time Ordinary Time

To put your ATO salary in perspective, compare it with two key benchmarks from Fair Work and the Australian Bureau of Statistics (ABS):

• National minimum wage: $26.44 per hour, $1,004.90 per week, or $52,255 per year (from 1 July 2026).
• Full-time adult ordinary time earnings: $2,083.70 per week, or $108,352 per year (ABS Average Weekly Earnings, May 2026, seasonally adjusted, excluding overtime and employer super).

If you earn the minimum wage, your marginal tax rate is 15% plus 2% Medicare, but after the tax-free threshold and LITO, your effective tax rate is lower. A full-time minimum wage worker takes home roughly $45,000–$46,000 annually after tax and Medicare, depending on exact offsets. On the other hand, a worker on full-time ordinary time earnings of $108,352 falls into the 30% marginal bracket (plus Medicare), with a higher effective rate. The Take-home pay page on this site can help you estimate your own net pay.

How to Estimate Your Take-Home Pay

To calculate your take-home pay, start with your gross annual salary. Subtract the tax using the ATO rates above, then subtract the Medicare levy (2% of taxable income, adjusted for thresholds). Add any LITO you are eligible for. The result is your after-tax income. Divide by 26 to get your fortnightly take-home, or by 52 for weekly. Remember that superannuation is not deducted from your take-home if your salary is quoted as ‘plus super’ – the 12% super guarantee is paid on top by your employer.

The ATO’s tax withheld calculator can give you a precise figure for each pay period. For a quick estimate, use the Clearance tool on this site, which applies the 2026–27 rates and Medicare levy.

Important Notes

This guide is a resident estimate only. It excludes HELP/HECS repayments, the Medicare levy surcharge, salary sacrifice arrangements, and payroll tax-table rounding. Always refer to the ATO’s official tax tables and calculators for your specific situation. The Tax and Medicare section of this site has more detail on offsets and surcharges.

By understanding how the ATO salary tax system works, you can better negotiate your pay and plan your budget. Whether you’re on the minimum wage or earning above the average, knowing your take-home pay helps you make informed financial decisions.