Low Income Tax Offset (LITO) Australia 2026-27
LITO phase-out rates 2026-27
| Taxable income | LITO amount | Phase-out rate |
|---|---|---|
| Up to $37,500 | $700 (maximum) | None |
| $37,501 to $45,000 | $700 to $325 | 5 cents per dollar |
| $45,001 to $66,667 | $325 to $0 | 1.5 cents per dollar |
| Above $66,667 | Nil | N/A |
LITO at key income levels
| Gross income | LITO offset | Net annual (est.) |
|---|---|---|
| $20,000 | $700 | $20,000 |
| $30,000 | $700 | $28,731 |
| $37,500 | $700 | $34,555 |
| $45,000 | $325 | $40,405 |
| $55,000 | $175 | $47,055 |
| $66,667 | Nil | $54,814 |
| $80,000 | Nil | $63,880 |
How LITO combines with the tax-free threshold
The tax-free threshold of $18,200 means the first slice of income is already tax-free. For incomes just above $18,200, the 16% rate applies but LITO reduces the resulting tax payable to zero until taxable income reaches roughly $26,000 (the point at which LITO of $700 exactly offsets the 16% rate applied to income above $18,200).
Above that point you start paying some net income tax, but the LITO still reduces the bill until $37,500, where it begins to phase out.
LITO vs the old LMITO
The Low and Middle Income Tax Offset (LMITO) provided an additional offset of up to $1,500 for incomes between $48,000 and $90,000, reaching up to $126,000. It was a temporary measure introduced in 2018-19 and abolished after the 2021-22 income year. The LITO is a permanent part of the tax system and is not related to the LMITO.
Does LITO apply to the Medicare levy?
No. LITO reduces income tax only, not the Medicare levy. The Medicare levy is calculated separately at 2% of taxable income (with its own low-income shade-in from $28,011). Even if LITO reduces your income tax to zero, the Medicare levy can still apply.
Frequently asked questions
What is the maximum Low Income Tax Offset in 2026-27?
The maximum LITO is $700, available to taxpayers with taxable income up to $37,500. It phases out to $325 at $45,000 and to zero at $66,667.
Can I receive the LITO as a cash refund?
LITO is a non-refundable tax offset. It reduces the income tax you owe, but if your tax liability is already zero it cannot generate a refund. It also does not reduce the Medicare levy.
Was the Low and Middle Income Tax Offset abolished?
Yes. The LMITO (Low and Middle Income Tax Offset), which provided up to $1,500 for incomes up to $126,000, ended after the 2021-22 income year. The LITO remains in place for 2026-27.
Source: ATO Income Tax Assessment Act; 2026-27 tax rates and offsets. Net figures modelled using ATO PAYG schedule 1 rates. Last updated 2026-11-04.