The Stage 3 tax cuts, legislated in 2019 and revised in early 2024, took effect on 1 July 2024 and reshape Australian income tax for everyone earning above $18,200. This guide walks through what the brackets actually are for the 2026-27 financial year (1 July 2026, 30 June 2027) and shows the take-home math for a wide range of incomes.
The Stage 3 brackets (residents, 2026-27)
| Threshold | Rate |
|---|---|
| $0, $18,200 | 0% (tax-free threshold) |
| $18,201, $45,000 | 16% |
| $45,001, $135,000 | 30% |
| $135,001, $190,000 | 37% |
| $190,001+ | 45% |
Compared to pre-Stage-3 brackets:
- The 19% on $18,201, $45,000 dropped to 16%.
- The 32.5% on $45,001, $120,000 dropped to 30% AND extended to $135,000.
- The 37% threshold rose from $120,000 to $135,000.
- The 45% threshold rose from $180,000 to $190,000.
In dollar terms, this is the biggest middle-income tax cut in two decades. Every taxpayer earning above $18,200 pays less tax than they would have under the 2023-24 system.
On top: Medicare Levy
Australia adds a 2% Medicare Levy on top of these brackets (with low-income phase-in around $27,222, $34,027). So at any income above the phase-in zone, your headline marginal rate is 2 percentage points higher than the income tax bracket alone.
Effective marginal rates including Medicare Levy:
- $45,001, $135,000: 32% (30% + 2%)
- $135,001, $190,000: 39% (37% + 2%)
- $190,001+: 47% (45% + 2%)
High earners without private hospital cover may also owe the Medicare Levy Surcharge (additional 1, 1.5% above $97,000 single / $194,000 family thresholds), making total marginal rate up to 48.5% for some scenarios.
Get the take-home math for any salary from our Take-Home Pay Calculator.
Take-home pay by salary (2026-27, no HECS, no salary sacrifice)
| Gross salary | Income tax | Medicare Levy | Net annual | Effective tax |
|---|---|---|---|---|
| $50,000 | $5,338 | $1,000 | $43,662 | 12.7% |
| $80,000 | $14,788 | $1,600 | $63,612 | 20.5% |
| $100,000 | $20,788 | $2,000 | $77,212 | 22.8% |
| $135,000 | $31,288 | $2,700 | $101,012 | 25.2% |
| $150,000 | $36,838 | $3,000 | $110,162 | 26.6% |
| $200,000 | $59,138 | $4,000 | $136,862 | 31.6% |
| $300,000 | $104,138 | $6,000 | $189,862 | 36.7% |
Note: Excludes Super Guarantee (paid by employer on top of salary).
These figures match the Income Tax Calculator with Medicare Levy added.
Who benefits most
The Stage 3 cuts were politically controversial precisely because they’re flat across the income spectrum, not bracket-progressive:
- Average earner (~$70,000) saves around $1,500-2,000 vs pre-Stage-3.
- Median full-time worker (~$95,000) saves around $2,400.
- Top earner ($200,000+) saves around $4,500.
The 2024 revision rebalanced this slightly to give a larger proportional cut to lower incomes (lifting the bottom of the 30% bracket and lowering the 19% rate to 16%). But the structural shape of Stage 3 still flattens the marginal rate curve overall.
Salary sacrifice into Super: still the most powerful planning lever
Even after Stage 3, the salary-sacrifice-to-Super arbitrage remains intact:
- Salary sacrificed to Super: taxed at 15% inside Super (concessional contribution).
- Same dollars taken as salary: taxed at your marginal bracket.
- Saving: marginal rate, 15%.
At a 32% marginal (Medicare-inclusive on the $45K-$135K band), each $1 sacrificed saves 17 cents. At a 47% marginal (above $190K), each $1 saves 32 cents.
Concessional cap for 2026-27: $30,000/year including employer Super Guarantee. So if your employer contributes $11,400 (12% of $95K salary), you can salary-sacrifice up to $18,600 more.
Our Salary Sacrifice Calculator does the maths.
Watch out: Division 293 tax
If your combined income plus concessional Super contributions exceed $250,000 in 2026-27, you owe an additional 15% tax on Super contributions above the threshold (Division 293). This pushes the effective tax on those contributions to 30%, still better than the 47% marginal rate of a high earner taking them as salary, but reducing the salary-sacrifice arbitrage.
HECS-HELP and your effective rate
If you have a HECS-HELP study loan, the compulsory repayment is a separate deduction calculated as a percentage of your “repayment income” (taxable income + reportable fringe benefits + Super sacrifice + investment losses).
Repayment rates climb from 1% at $51,550 to 10% at $151,201+ of repayment income. This adds 1-10 percentage points to your effective tax burden.
Compute yours at the HECS-HELP Calculator.
Capital gains tax (still 50% discount)
The 50% CGT discount survived Stage 3 untouched. For assets held more than 12 months:
- 50% of the gain is excluded from assessable income.
- The remaining 50% is added to your taxable income and taxed at your marginal rate.
For high earners at the 45%+ bracket, the effective LTCG rate becomes 22.5-23.5% (including Medicare Levy on half the gain). Still significantly better than ordinary income taxation.
Our Capital Gains Tax Calculator computes the effective CGT for any scenario.
Super Guarantee: 12% from 1 July 2025
The Super Guarantee, your employer’s mandatory contribution on top of salary, rose to 12% from 1 July 2025 (up from 11.5%). This is paid in addition to your gross salary, not deducted from it.
On a $95,000 salary:
- Take-home: ~$72,000 after PAYG + Medicare Levy
- Super Guarantee: $11,400 (12% × $95K)
- Total package value: $106,400
State stamp duty (still varies widely)
Stage 3 didn’t touch state-based property duty. Stamp duty on a $700,000 owner-occupied purchase:
- NSW: ~$26,990
- VIC: ~$37,070 (highest)
- QLD: ~$17,350 (lowest)
- ACT: ~$20,790
First-home buyer concessions can dramatically reduce these figures. State revenue offices have the exact schedules. Our Stamp Duty Calculator gives state-by-state estimates.
Common Australian tax planning mistakes
Not salary-sacrificing to Super. The arbitrage is still the largest single legal tax-reduction lever for working Australians.
Forgetting the concessional cap. Going over the $30,000 cap creates excess contributions tax. The cap includes employer SG.
Missing the >$250,000 Div 293 threshold. Adding salary sacrifice when you’re already at $250,000+ combined income costs you an extra 15% on contributions above the line.
Holding capital assets under 12 months unnecessarily. Just hold a few more weeks if possible to qualify for the 50% CGT discount.
Not optimising HECS-HELP timing. Lump-sum voluntary repayments to clear the HECS balance before a year of high income can avoid compulsory repayment in that year.
Investing inside a Family Trust without understanding the streaming rules. Distributions to high-earning beneficiaries get taxed at their marginal rate. Trusts are useful but complex.
Other countries
Stage 3 brought Australia’s bracket structure closer to that of:
- United Kingdom: 3 bands (20/40/45%) with a brutal taper. Personal allowance £12,570.
- Canada: 5 federal + 13 provincial brackets. Combined top of 53%.
- United States: 7 federal brackets (10-37%). State varies.
- India: 6 bands in new regime (0/5/10/15/20/30).
Primary sources
- ATO Individual Income Tax Rates, Stage 3 brackets
- ATO Medicare Levy, 2% + surcharge
- ATO Super Guarantee, 12% rate from 2025
- ATO Division 293, high-income contribution tax