Low Income Tax Offset (LITO) 2026-27

The Low Income Tax Offset takes up to $700 off your income tax. You get the full $700 on a taxable income up to $37,500. It reduces between $37,500 and $66,667, where it reaches nil.

Work out your LITO

Taxable income

Tax year

Your LITO

$475

Income tax before LITO

$3,570

Income tax after LITO

$3,095

Reducing by 5c for each $1 over $37,500.

LITO thresholds 2026-27

Taxable income	Offset
$37,500 or less	$700
$37,501 to $45,000	$700 minus 5c for each $1 over $37,500
$45,001 to $66,666	$325 minus 1.5c for each $1 over $45,000
$66,667 and over	Nil

LITO at common incomes in 2026-27:

$30,000: $700
$40,000: $575
$45,000: $325
$55,000: $175
$65,000: $25

How LITO fits into your tax

LITO comes off the income tax worked out from the tax brackets, before the Medicare levy is added. Because it reduces tax already calculated, it lowers your average tax rate but not your bracket. Between $37,500 and $66,667, each extra dollar earned also reduces the offset, so your real marginal rate there is a little higher than the bracket rate.

To see LITO inside your full result, use the take-home pay calculator or the tax return calculator.

LITO is the help at the low end of the income scale. At the high end the pull runs the other way: a single person earning over $105,000 with no private hospital cover pays the Medicare levy surcharge, and once income plus super contributions passes $250,000, Division 293 tax adds 15% on those contributions.

Seniors and pensioners tax offset (SAPTO)

SAPTO is a separate offset for people of Age Pension age and some pension recipients, and it can be claimed alongside LITO. This site does not calculate SAPTO yet. The ATO works out both offsets for you when you lodge.

Sources: ATO: Low income tax offset. Maintained by James Crawford; last updated 21 October 2026. How our calculators work.

Frequently Asked Questions

Who gets the Low Income Tax Offset?

Australian residents for tax purposes with a taxable income under $66,667. You do not apply for it: the ATO works it out when you lodge your tax return.

Can LITO give me a refund on its own?

No. LITO is non-refundable. It can reduce the tax you owe to nil, but any offset left over is not paid to you. It does not reduce the Medicare levy.

Is LITO included in the tax withheld from my pay?

Yes, if you claim the tax-free threshold. The ATO withholding schedules build LITO into the amount your employer takes out each pay, so most people do not see it as a separate refund.

Is LITO the same as the low and middle income tax offset?

No. The low and middle income tax offset (LMITO) ended after the 2021-22 income year. LITO continues and is the only one of the two that applies now.