Australian income tax rates
Australia uses a progressive income tax system, with different tax brackets for residents and non-residents. For the 2025-26 income year, rates range from 0% to 45% for residents. Americans living in Australia may still need to file US taxes, although Australian taxes often help reduce double taxation through foreign tax credits.
Australia also operates on a July 1 to June 30 tax year rather than the calendar year used in the US, which can create additional filing complexity for Americans abroad.
Last updated May 22, 2026
Written by: Takouhi Trpceski
In this article
What are the current Australian income tax rates for individuals?
The current Australian resident tax brackets for the 2025-26 income year are outlined below.
Australian resident income tax rates (2025-26)
|
Taxable income (AUD$) |
Tax payable |
|
AUD$0-AUD$18,200 |
Nil |
|
AUD$18,201-AUD$45,000 |
16 cents for each AUD$1 over AUD$18,200 |
|
AUD$45,001-AUD$135,000 |
AUD$4,288 plus 30 cents for each AUD$1 over AUD$45,000 |
|
AUD$135,001-AUD$190,000 |
AUD$31,288 plus 37 cents for each AUD$1 over AUD$135,000 |
|
Over AUD$190,000 |
AUD$51,638 plus 45 cents for each AUD$1 over AUD$190,000 |
Australian income tax rates for non-residents
Non-residents generally pay higher taxes because they do not receive the tax-free threshold available to residents. In practical terms, taxation often begins from the first Australian dollar earned.
This often affects short-term workers, digital nomads, temporary assignments, and Americans who have not yet established strong Australian residency ties.
However, Australian tax residency is determined based on the ATO’s residency tests and the individual facts of each person’s situation, rather than visa type or work arrangement alone.
The current non-resident tax brackets are outlined below.
Australian non-resident income tax rates (2025-26)
|
Taxable income (AUD$) |
Tax payable |
|
AUD$0-AUD$135,000 |
30 cents for each AUD$1 |
|
AUD$135,001-AUD$190,000 |
AUD$40,500 plus 37 cents for each AUD$1 over AUD$135,000 |
|
Over AUD$190,000 |
AUD$60,850 plus 45 cents for each AUD$1 over AUD$190,000 |
Do non-residents pay higher taxes in Australia?
Usually, yes. Australian non-residents generally do not receive the tax-free threshold available to residents, meaning tax often starts from the first Australian dollar earned.
This can affect:
- short-term workers
- some digital nomads
- temporary assignments
- and Americans who have not yet established strong Australian residency ties
Still, visa status alone does not determine tax residency. The Australian Taxation Office (ATO) looks at the broader facts of your situation, including where you live, work, and maintain your ordinary life.
Australian non-resident income tax rates (2025-26)
|
Taxable income (AUD$) |
Tax payable |
|
AUD$0-AUD$135,000 |
30 cents for each AUD$1 |
|
AUD$135,001–AUD$190,000 |
AUD$40,500 plus 37 cents for each AUD$1 over AUD$135,000 |
|
Over AUD$190,000 |
AUD$60,850 plus 45 cents for each AUD$1 over AUD$190,000 |
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Do temporary visa holders pay different tax rates in Australia?
Not necessarily. Holding a temporary visa does not automatically make someone a non-resident for Australian tax purposes.
What is a temporary resident for Australian tax purposes?
In general, a temporary resident is someone who:
- holds a temporary visa
- is not an Australian citizen or permanent resident
- and whose spouse is also not an Australian citizen or permanent resident
Temporary resident status matters because some foreign income may receive favorable treatment under Australian tax rules. But this is where things get messy for Americans.
How does Australia decide if you are a tax resident?
Australia determines tax residency using several legal tests rather than one simple rule. The key question is often whether Australia has become your ordinary place of residence and day-to-day home.
The ATO usually looks at factors like how long you stay in the country, whether you maintain a home there, your employment arrangements, family ties, and whether Australia has become your ordinary day-to-day base.
Some of the main residency tests include:
- the resides test
- the domicile test
- the 183-day test
- the Commonwealth superannuation test
Do Americans living in Australia still pay US taxes?
Yes. US citizens and Green Card holders generally still need to file US tax returns while living in Australia. Even if no additional US tax is owed, Americans abroad may still need to file:
- Form 1040
- FBAR
- Form 8938
- other international reporting forms
Do US expats pay double tax in Australia?
Usually not. Many Americans in Australia rely on foreign tax credits or other relief provisions to reduce the risk of double taxation. Still, “avoiding double taxation” does not mean the systems work smoothly together.
Areas like Australian superannuation, PFIC investments, self-employment income, foreign trust reporting, and timing differences between the two systems regularly create complications for Americans abroad.
Should Americans in Australia use the FTC or FEIE?
Many Americans in Australia rely more heavily on the Foreign Tax Credit (FTC) because Australian tax rates are often high enough to offset a large portion of US tax liability.
The Foreign Earned Income Exclusion (FEIE) can still help in certain cases, particularly for lower-tax situations or moderate earned income. But online discussions sometimes oversimplify the decision and treat the FEIE as the automatic answer for every expat. In Australia, that is often not the case.
FTC vs FEIE for Americans living in Australia
|
Strategy |
General purpose |
|
Foreign Tax Credit (FTC) |
Offsets US tax using Australian taxes already paid |
|
Foreign Earned Income Exclusion (FEIE) |
Excludes part of foreign earned income from US tax |
|
Combination approach |
Sometimes used in more complex situations |
What taxes besides income tax should Americans in Australia know about?
Income tax is only one piece of the broader Australian tax system. Americans living in Australia often encounter other taxes and reporting issues that interact awkwardly with US rules.
- Medicare levy: Australia generally charges a 2% Medicare levy on taxable income. Certain temporary residents and exempt individuals may qualify for relief, although eligibility rules can become technical.
- Superannuation: Australian superannuation is one of the most misunderstood areas for Americans abroad. The US tax treatment of Australian superannuation is still debated in some areas. Depending on the account structure and reporting position used, additional US reporting or tax complications may arise.
- Capital gains tax: Australia taxes capital gains on assets such as shares, property, and investments. In many cases, eligible Australian tax residents who hold assets for more than 12 months may qualify for a capital gains tax discount.
- PAYG withholding: Australia’s PAYG system works similarly to US payroll withholding. Employers withhold tax throughout the year to reduce large year-end balances. However, PAYG withholding does not satisfy US filing obligations by itself.
Common Australian tax mistakes US expats make
Most cross-border tax mistakes happen because people assume the Australian and US systems work similarly. They often do not. A few problems appear repeatedly among Americans living in Australia.
- Assuming Australian taxes replace US filing: Paying Australian tax does not remove the obligation to file a US return. Many expats still need to file annual US forms even if they owe little or no US tax after credits are applied.
- Confusing residency definitions: Someone can simultaneously qualify as an Australian tax resident while remaining fully subject to US taxation, since the two systems operate independently from one another.
- Automatically choosing the FEIE: The Foreign Earned Income Exclusion receives enormous attention online. However, many Americans in Australia rely more heavily on the Foreign Tax Credit because Australian tax rates are often high enough to offset much of their US tax liability.
- Ignoring investment reporting: Australian managed funds, ETFs, and pooled investments can create PFIC reporting issues for US taxpayers.
- Assuming “no tax due” means “nothing to file”: International reporting obligations can still apply even when the final US tax bill is low or zero.
Frequently Asked Questions
How much tax do you pay on AUD$100,000 in Australia?
The exact amount depends on residency status, deductions, Medicare levy exposure, and other factors. Under the 2025–26 Australian resident tax rates, a resident earning AUD$100,000 would generally pay about AUD$20,788 in income tax before the Medicare levy. If the full 2% Medicare levy applies, the total tax would be approximately AUD$22,788.
Are Australian tax brackets progressive?
Do non-residents pay more tax in Australia?
Can Americans use both the FEIE and Foreign Tax Credit in Australia?
Does Australia tax worldwide income?
Is Australian tax higher than US tax?
Further reading
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Takouhi Trpceski brings 16 years of expat tax expertise in US tax preparation, planning, and advisory for Americans and Green Card holders living in Australia. Takouhi is a Certified Public Accountant (CPA) licensed in New York and a Chartered Accountant (CA) in Australia and New Zealand.
Takouhi has counseled ultra-high-net-worth families, including multi-generational groups managing assets in excess of USD $500 million, on matters spanning trusts, family investment partnerships, cross-border tax planning, and global compliance.
Takouhi specializes in: Foreign Asset Reporting & Compliance, Cross-Border Tax Planning (US-Australia), and Streamlined Offshore Procedures.
