The tax-free threshold: claim it, and only once

The first $18,200 you earn each financial year is tax-free if you are an Australian resident. You claim it by ticking the question on the TFN declaration when you start a job, and you should claim it from one employer only, normally the one that pays you the most. Claiming it twice does not change your real tax, it just builds a bill for filing time.

What the threshold does

Resident tax rates for 2026-27 start at zero up to $18,200, then 15% to $45,000. On a $45,000 salary your take-home is $40,405 per year under the standard settings of our pay calculator, and the first $18,200 of that salary contributed no tax at all. Non-residents get no threshold and pay from the first dollar.

The second-job myth

A second job is not taxed at a special higher rate. It only feels that way because you claim the threshold at job one, so job two withholds at the no-threshold scale from dollar one. Your actual year-end tax depends on the combined income alone. Withholding more during the year simply means a bigger refund, and withholding less means a bill; the tax on the same total income is unchanged.

Ticked the box twice?

Nothing illegal has happened, but both employers are now withholding as if your first $18,200 were tax-free with each of them, which under-collects across the year. Fix it by giving the lower-paying employer a withholding declaration unticking the threshold, and expect to settle the shortfall at filing if it ran for months.

When not to claim it at your main job

Rarely. The threshold usually belongs at the job with the biggest, steadiest pay so the smoother withholding lands there. People with several small casual jobs that together stay under $18,200 can reasonably claim it where they like, since no tax is due overall anyway.

Frequently asked questions

Does the threshold change my Medicare levy?

No. The 2% levy has its own low-income thresholds and is calculated separately on taxable income at filing.

I arrived in Australia mid-year. Do I get the full $18,200?

New residents get a part-year threshold: a base amount plus a monthly share for the months after arrival, claimed through your tax return.

Where do I see the effect on my own pay?

The Australia pay calculator models the resident scale with the threshold, HELP repayments and the Medicare levy for 2026-27.

Resident rates 2026-27 as used by our tested engine. Last updated 2026-11-04.