What Affects Your Take-Home Pay in Australia (2025–26)

Your gross salary is what your employer agrees to pay before any deductions. Your net pay (take-home pay) is what you actually receive. The gap between the two can be substantial — for a $90,000 salary, you might take home around $67,000–$69,000 after all deductions.

The main factors that create this gap are:

• Income tax (the largest deduction by far)
• Medicare Levy (2%)
• HECS/HELP repayments (if applicable)
• Medicare Levy Surcharge (if applicable)

Superannuation is not a deduction from your take-home pay — it is an additional employer contribution paid on top. However, if you are salary sacrificing into super, those contributions do reduce your taxable income and take-home pay.

Income tax is calculated using Australia's progressive tax brackets. For 2025–26, the rates are 0% up to $18,200, then 16%, 30%, 37%, and 45% at higher income bands. The key point is that your effective tax rate — the percentage of total income paid in tax — is always lower than your marginal rate, because the lower brackets are applied first.

Tax is withheld from each pay by your employer under the PAYG system. Your employer uses ATO withholding tables to estimate your annual tax, then divides it by your pay periods. If you earn $80,000, you pay approximately $15,788 in income tax — about 19.7% of your gross income.

The Low Income Tax Offset (LITO) reduces income tax for earners up to $66,667 — the maximum saving is $700 for incomes under $37,500. This is applied automatically.

On top of income tax, most Australians pay a 2% Medicare Levy on their taxable income. This funds the public Medicare health system. On an $80,000 salary, the levy is $1,600 per year — about $62 per fortnight.

Low-income earners below approximately $27,222 are exempt. If you do not have private hospital insurance and earn above $93,000 (single), you also pay the Medicare Levy Surcharge of 1%–1.5% on top of the standard levy.

If you have a HECS-HELP student loan, compulsory repayments kick in once your income exceeds approximately $54,435. The rate starts at 1% and rises to 10% at higher incomes. These repayments are withheld from your pay by your employer in the same way as tax.

For a $70,000 earner with HECS debt, the repayment rate is around 2.5%, meaning $1,750 per year (about $67 per fortnight) is withheld and applied to reduce your HECS debt. This is in addition to income tax and the Medicare Levy.

Claim the Tax-Free Threshold

If you have one employer, always claim the tax-free threshold on your TFN declaration. This ensures your employer withholds less tax from each pay. If you have two jobs, only claim it with the primary employer to avoid a tax debt at year end.

Lodge Your Tax Return and Claim Deductions

Legitimate work-related deductions (tools, uniforms, home office costs, professional development) reduce your taxable income and result in a larger tax refund. The ATO's myDeductions app is a useful tool for tracking deductions throughout the year.

Salary Packaging (Where Available)

Some employers — particularly in the public sector, healthcare, and charities — offer salary packaging, where certain expenses (like additional super, novated leases, or laptops) are paid pre-tax. This reduces your taxable income and can significantly boost your effective take-home value, though the actual cash in your bank may not increase.

Private Health Insurance (If High Income)

Earning above $93,000 (single) without private hospital cover means paying the Medicare Levy Surcharge of 1%+. A basic hospital policy often costs less than the surcharge for people in this income range — effectively increasing net pay while gaining health coverage.