How we calculate

Two different numbers: payslip tax and actual tax

Your payslip shows tax withheld under the ATO's PAYG withholding schedules. We implement these exactly:

• Schedule 1, Statement of formulas for calculating amounts to be withheld (NAT 1004)
• Schedule 8, study and training support loan components (NAT 3539)
• Schedule 5, back payments, commissions and bonuses, using method A with the 47% cap
• Schedule 15, working holiday makers

We use the ATO's rounding rules: weekly earnings ignore cents and add 99c, monthly earnings get the 33-cent rule, and results round to the nearest dollar.

Your actual tax is worked out the way the ATO assesses your return:

• the resident, foreign resident or working holiday maker rates, applied to your taxable income
• less non-refundable offsets: LITO, LMITO, SAPTO, the Working Australians Tax Offset, the small business income tax offset and others
• plus the Medicare levy, including the low-income and family reductions in sections 7 and 8 of the Medicare Levy Act 1986, and any Medicare levy surcharge
• plus your compulsory study loan repayment

The difference between the two is your estimated refund or bill.

What changes in 2026–27

• The rate on income from $18,201 to $45,000 fell to 15% under the Treasury Laws Amendment (More Cost of Living Relief) Act 2025. It falls to 14% from 2027–28.
• The $1,000 standard deduction (ITAA 1997 s 25-130) applies automatically to people with wage income, reduced by covered work-related expenses claimed. PAYG withholding doesn't include it, so it usually shows up as a refund.
• Study loan repayments are marginal (HESA s 154-20): 15% above $69,528, 17% above $129,717, capped at 10% of repayment income. Repayment income adds back reportable fringe benefits, reportable super contributions, net investment losses and exempt foreign income.
• The super guarantee is 12%, and under Payday Super the maximum contribution base is an annual $270,830 per employer.
• Medicare levy low-income thresholds for 2026–27 haven't been announced. The law applies the 2025–26 amounts until Parliament changes them.

How we test

The calculation engine has an automated test suite that checks it against:

• every value in the ATO's published Schedule 1 sample data for the 2024 and 2026 formulas (1,440 figures across all scales and pay periods)
• the Schedule 8 sample data
• every worked example in the ATO's schedules
• the ATO's Medicare levy reduction examples
• Services Australia's published Family Tax Benefit and Child Care Subsidy income limits

For earlier years we also checked the withholding formulas against the ATO's full weekly tax tables, more than 10,000 rows. Every value matches.

Years covered

2018–19, 2019–20, 2020–21, 2021–22, 2022–23, 2023–24, 2024–25, 2025–26, 2026–27, 2027–28. 2020–21 withholding uses the formulas in force from 13 October 2020. 2027–28 uses legislated rates, with indexed thresholds carried forward until they're published.

Data sources

• Australian Taxation Office: tax rates, tax tables and withholding schedules, Medicare levy and surcharge thresholds, study loan thresholds and indexation, super rates and caps, FBT rates and car limits.
• Federal Register of Legislation: Income Tax Rates Act 1986, Medicare Levy Act 1986, ITAA 1997, Higher Education Support Act 2003, A New Tax System (Family Assistance) Act 1999.
• Services Australia, A guide to Australian Government payments (July and September 2026 editions): Family Tax Benefit, Child Care Subsidy and Parental Leave Pay.
• Department of Education: Child Care Subsidy hourly rate caps and the 3 Day Guarantee.
• Australian Bureau of Statistics: Consumer Price Index (quarterly and monthly) and Wage Price Index.
• Reserve Bank of Australia: Statement on Monetary Policy, August 2026 forecasts.
• ATO Taxation Statistics 2023–24 and 2012–13: income percentiles.
• 2026–27 Budget Paper No. 1, Statement 6: expenses by function, sub-function and component (tables 6.3 to 6.17 and their component tables), and the top 20 programs (table 6.1.3).
• Fair Work Commission: National Minimum Wage Order 2026.

Limitations

We can't see your full circumstances. We don't model:

• part-year residency
• minors' tax rates
• employment termination payments
• the Medicare levy adjustment on withholding declarations
• unused SAPTO transfers between spouses
• Rent Assistance
• every family payment rule

Payroll systems can round study loan components separately from tax, which can make your payslip differ by $1. Treat results as estimates, and check important decisions with the ATO or a registered tax agent.

Spotted something wrong? Tell us and we'll fix it quickly.