What is the concessional super contributions cap for FY 2025-26?

The concessional (pre-tax) contributions cap is $30,000 for FY 2025-26, including employer Superannuation Guarantee contributions (ITAR 1997, r.292-25.01). Depending on an individual's circumstances, concessional contributions are generally taxed at 15% inside super instead of the individual's marginal rate. Depending on the applicable eligibility rules, unused cap amounts from the previous 5 years may also be available where the total super balance is below $500,000.

What is the Medicare Levy Surcharge threshold in FY 2025-26?

Depending on an individual's circumstances, singles earning above $101,000 without an appropriate level of private hospital cover pay the Medicare Levy Surcharge (MLS). The surcharge is 1% for $101,001–$118,000, 1.25% for $118,001–$158,000, and 1.5% above $158,000 (ITAA 1936, Subdivision 61-G; 2025-26 indexed thresholds).

When can working-from-home expenses be claimed in FY 2025-26?

Depending on an individual's circumstances and eligibility, the ATO's revised fixed rate method (PCG 2023/1, effective 1 July 2022) allows a claim of 67 cents per work-from-home hour. This covers electricity, internet, phone, and stationery. A record of actual hours worked from home is required. The ATO no longer accepts a 4-week representative diary for years after 2022-23. Depending on eligibility, a separate decline-in-value claim for home office equipment costing over $300 may also be available.

What is the CGT 50% discount and when does it apply?

Australian resident individuals who hold a capital gains asset for more than 12 months (365 days) are entitled to a 50% discount on the capital gain before it is added to assessable income (ITAA 1997, Division 115). For example, a $50,000 gain on shares held 13 months is reduced to $25,000 of assessable income. The discount does not apply to assets acquired before 20 September 1985 (pre-CGT assets) or to companies.

What are the FY 2025-26 income tax rates in Australia?

FY 2025-26 tax brackets (residents): $0–$18,200 at 0%, $18,201–$45,000 at 16%, $45,001–$135,000 at 30%, $135,001–$190,000 at 37%, over $190,000 at 45%. Add 2% Medicare Levy for most taxpayers. Source: Income Tax Rates Act 1986, Schedule 7, as amended by Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024.

Tax Guide · FY 2025-26

Australian Tax Considerations for FY 2025-26

Q: What is the tax-free threshold in Australia for FY 2025-26?

The tax-free threshold is $18,200. No income tax is payable on the first $18,200 of taxable income (Income Tax Rates Act 1986, Schedule 7, as amended by Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024). With the Low Income Tax Offset (LITO) of up to $700, the effective tax-free threshold extends to $20,788 for low-income earners.

General information about 7 ATO-backed tax considerations, with legislation, ruling references, and illustrative dollar figures.

Last revised 2 June 2026

General information only. This guide does not take into account any individual's objectives, financial situation, or needs. Depending on individual circumstances, tax outcomes and eligibility can differ. Consider whether the information is appropriate before acting and seek professional advice where required. For any financial product decision, read the relevant Product Disclosure Statement.

$18,200

Tax-free threshold

47%

Top combined rate

$30,000

Super CC cap

67¢/hr

WFH fixed rate

Budget 2027

CGT 50% discount is proposed to be replaced from 1 July 2027

The 2026–27 Federal Budget proposes inflation indexation + a 30% minimum tax on capital gains. Read the general information →

FY 2025-26 Income Tax Brackets

Source: Income Tax Rates Act 1986, Schedule 7, as amended by Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024

$0 – $18,200

Marginal Rate: 0%
+ Medicare (2%): 0%
Change from FY24-25: —

$18,201 – $45,000

Marginal Rate: 16%
+ Medicare (2%): 18%
Change from FY24-25: ↓ from 19%

$45,001 – $135,000

Marginal Rate: 30%
+ Medicare (2%): 32%
Change from FY24-25: ↓ from 32.5%

$135,001 – $190,000

Marginal Rate: 37%
+ Medicare (2%): 39%
Change from FY24-25: Unchanged

$190,001+

Marginal Rate: 45%
+ Medicare (2%): 47%
Change from FY24-25: Unchanged

Taxable Income	Marginal Rate	+ Medicare (2%)	Change from FY24-25
$0 – $18,200	0%	0%	—
$18,201 – $45,000	16%	18%	↓ from 19%
$45,001 – $135,000	30%	32%	↓ from 32.5%
$135,001 – $190,000	37%	39%	Unchanged
$190,001+	45%	47%	Unchanged

Low Income Tax Offset (LITO) of up to $700 further reduces tax for incomes up to $66,667. Effective tax-free threshold with LITO: $20,788.

7 Tax Considerations for FY 2025-26

Salary Sacrifice to Superannuation

ITAA 1997, s.290-150 · Concessional contributions cap: $30,000 (FY 2025-26)

Depending on individual circumstances, pre-tax salary sacrificed into super is generally taxed at a flat 15% contributions tax instead of the individual's marginal rate. For an illustrative employee on $120,000 (30% bracket + 2% Medicare = 32% combined), every $1,000 salary sacrificed changes the tax outcome by $170.

$60,000

Combined rate: 32%
Tax saved per $1,000 sacrificed: $170
Illustrative annual change (full cap): $3,230

$100,000

Combined rate: 32%
Tax saved per $1,000 sacrificed: $170
Illustrative annual change (full cap): $3,230

$150,000

Combined rate: 39%
Tax saved per $1,000 sacrificed: $240
Illustrative annual change (full cap): $4,560

$200,000+

Combined rate: 47%
Tax saved per $1,000 sacrificed: $320
Illustrative annual change (full cap): $6,080

Salary	Combined rate	Tax saved per $1,000 sacrificed	Illustrative annual change (full cap)
$60,000	32%	$170	$3,230
$100,000	32%	$170	$3,230
$150,000	39%	$240	$4,560
$200,000+	47%	$320	$6,080

Note: Depending on individual circumstances, Div 293 applies an additional 15% tax on concessional contributions for income + contributions above $250,000.

Carry-Forward Concessional Contributions

ITAA 1997, s.291-20 · Super balance must be below $500,000 on 30 June prior year

Unused concessional cap amounts from the previous 5 financial years can be carried forward and used in a single year. This allows a one-off catch-up contribution — useful after parental leave, part-time periods, or a windfall income year.

›Depending on individual circumstances, available carry-forward balances can be checked in MyGov > ATO > Super.
›Contributions must be made before 30 June 2026 to count for FY 2025-26.
›Depending on the type of contribution and intended tax treatment, a Notice of Intent to Claim (NAT 71121) may need to be lodged with the fund before the relevant tax return is lodged.

Work-From-Home: 67¢ Fixed Rate (PCG 2023/1)

ATO PCG 2023/1 · Effective 1 July 2022 · Updated record-keeping from 1 March 2023

The ATO's revised fixed rate covers electricity, internet, phone, stationery, and computer consumables at 67 cents per work-from-home hour. Items costing over $300 (e.g. monitors, desks) can still be depreciated separately.

$301.50

450 hrs

1 day/wk

$603

900 hrs

2–3 days/wk

$1,005

1,500 hrs

Full WFH

Record-keeping requirement: A continuous log of actual hours worked from home for the full income year. The ATO no longer accepts a 4-week representative diary for FY 2022-23 onward.

Car Expenses — Cents per Kilometre

ITAA 1997, s.28-25 · ATO rate: 88¢/km for FY 2025-26 · Maximum: 5,000 km

Depending on individual circumstances and eligibility, the cents-per-kilometre method allows a deduction of 88 cents per kilometre for the first 5,000 work-related kilometres per year — a maximum deduction of $4,400. Receipts are not required, but the work purpose must be substantiated.

›Applies to cars (not motorcycles or utes > 1 tonne GVM).
›Work travel includes: client visits, inter-office travel, attending work conferences.
›Commuting from home to a regular workplace is not deductible.

CGT 50% Discount — Assets Held Over 12 Months

ITAA 1997, Division 115 · Applies to assets held > 365 days by Australian resident individuals

Australian resident individuals who hold an asset for more than 12 months are entitled to a 50% discount on any capital gain before it is included in assessable income.

$10,000

Without discount (<12 mo): $3,200
With discount (>12 mo): $1,600
Tax saved (30% bracket): $1,600

$30,000

Without discount (<12 mo): $9,600
With discount (>12 mo): $4,800
Tax saved (30% bracket): $4,800

$50,000

Without discount (<12 mo): $16,000
With discount (>12 mo): $8,000
Tax saved (30% bracket): $8,000

Gain	Without discount (<12 mo)	With discount (>12 mo)	Tax saved (30% bracket)
$10,000	$3,200	$1,600	$1,600
$30,000	$9,600	$4,800	$4,800
$50,000	$16,000	$8,000	$8,000

Private Health Insurance and the Medicare Levy Surcharge

ITAA 1936, Subdivision 61-G · FY 2025-26 indexed MLS thresholds

Singles without an appropriate level of hospital cover pay the MLS on top of the 2% Medicare Levy. The MLS is not waived for partial-year coverage — it is pro-rated based on the number of days without cover.

$101,001 – $118,000

MLS Rate: 1.0%
Annual MLS cost: $1,010 – $1,180
PHI rebate (base tier): 24.288%

$118,001 – $158,000

MLS Rate: 1.25%
Annual MLS cost: $1,475 – $1,975
PHI rebate (base tier): 16.192%

$158,001+

MLS Rate: 1.5%
Annual MLS cost: $2,370+
PHI rebate (base tier): 8.095%–0%

Income (single)	MLS Rate	Annual MLS cost	PHI rebate (base tier)
$101,001 – $118,000	1.0%	$1,010 – $1,180	24.288%
$118,001 – $158,000	1.25%	$1,475 – $1,975	16.192%
$158,001+	1.5%	$2,370+	8.095%–0%

Depending on individual circumstances and eligibility, the PHI rebate can reduce out-of-pocket premium costs. As an illustrative example, a $3,000/year policy costs approximately $2,273 after a 24.288% rebate.

General information only · Consider circumstances, coverage and the relevant PDS before purchasing

Compare policies ↗

First Home Super Saver Scheme (FHSS)

ITAA 1997, Subdivisions 290-H & 306-B · Annual FHSS limit: $15,000 · Lifetime limit: $50,000

Depending on individual circumstances and eligibility, first home buyers can make voluntary concessional contributions to super and later withdraw up to $50,000 lifetime (max $15,000/year) to put towards a first home. Withdrawals are taxed at the individual's marginal rate less a 30% tax offset.

›85% of concessional contributions are releasable (net of 15% contributions tax).
›Deemed earnings added at ATO shortfall interest charge rate (4.01% for FY 2025-26).
›Must apply for a FHSS determination before signing a contract of purchase.

ATO Ruling Spotlight

PCG 2023/1

Working from Home Expenses — Revised Fixed Rate Method

ATO Practical Compliance Guideline · Issued 16 February 2023 · Effective 1 July 2022

What it says

›67 cents per work-from-home hour (up from 52c under the prior shortcut method).
›Covers electricity, gas, internet, phone, stationery, printer ink.
›Cannot claim additional internet or phone expenses separately.
›No requirement for a dedicated home office room.

Record-keeping requirements

›From 1 March 2023: Must keep a continuous record of actual hours worked from home for the entire income year.
›A 4-week representative diary is no longer accepted.
›Records must show: date, start time, finish time, nature of work.
›Time-tracking apps (e.g. Toggl, Google Calendar) satisfy this requirement.

Dollar impact example

Employee works from home 3 days per week (approx. 936 hours/year). Deduction: 936 × $0.67 = $627. At the 30% bracket + 2% Medicare, the illustrative tax outcome changes by $200. Additional monitor ($800) depreciated at 25% diminishing value adds a further $200 deduction.

Frequently Asked Questions

What is the tax-free threshold in Australia for FY 2025-26?+

The tax-free threshold is $18,200. With the Low Income Tax Offset (LITO) of up to $700, the effective tax-free threshold is $20,788 for those who earn below $37,500.

What is the concessional super contributions cap?+

The concessional (pre-tax) cap is $30,000 for FY 2025-26, including employer Superannuation Guarantee contributions. Depending on an individual's circumstances and eligibility, additional carry-forward amounts may apply where the total super balance is below $500,000 and unused cap space exists from the past 5 years.

Does private health insurance fully eliminate the Medicare Levy Surcharge?+

No. Depending on an individual's circumstances, the MLS is applied pro-rata based on the number of days in the year without an appropriate level of private hospital cover (ITAA 1936, s.61-585). For example, where cover is held for only 6 months, the MLS applies to the other 6 months.

Can the work-from-home fixed rate and a separate internet deduction both be claimed?+

No. Under PCG 2023/1, the 67c/hour rate already includes internet and phone usage costs. A work-related portion of an internet bill cannot be separately claimed on top of the fixed rate.

What is the CGT discount and when does it apply?+

Australian resident individuals who hold a CGT asset for more than 12 months (365 days) are entitled to a 50% discount on the gross capital gain (ITAA 1997, Division 115). The discount does not apply to short-term gains, foreign residents, or companies.

What is Division 293 tax?+

Division 293 (ITAA 1936) imposes an additional 15% tax on concessional super contributions for individuals whose combined income and concessional contributions exceed $250,000. The effective contributions tax rate rises from 15% to 30% for affected amounts — still below the 39% or 47% marginal rate.

Model an Estimated Tax Outcome

Depending on the information entered, the free FY 2025-26 calculator provides an estimated tax outcome. Results are general information only and do not take into account objectives, financial situation, or needs.

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General information only. All figures are estimates based on ATO published rates for FY 2025-26.