Tax-free threshold 2026-27

The tax-free threshold is $18,200: Australian residents pay no income tax on the first $18,200 they earn in a financial year. You claim it on the tax file number declaration you give your employer, and if you have two jobs you should claim it from only one.

Two jobs: where to claim the tax-free threshold

Job 1 pay (before tax)

Job 1 paid

Job 2 pay (before tax)

Job 2 paid

Combined income $62,400 a year. Tax for the year on that income: $10,424.

What happens at tax time

Claim on job 1 only$8,216 withheld: about $2,208 to pay

Claim on job 2 only (closest to your real tax)$11,284 withheld: about $860 back

Claim on both jobs$5,512 withheld: about $4,912 to pay

Claim on neither job$13,988 withheld: about $3,564 back

Uses the ATO 2026-27 withholding formulas for each job and assumes the same pay all year, a resident with no HELP debt and no deductions. If every option leaves you owing, you can ask an employer to withhold extra each pay.

Job 1 pays $46,800 a year and job 2 pays $15,600.

Who can claim the tax-free threshold

Australian residents for tax purposes, for the whole year.
Part-year residents, at a reduced amount.
Not foreign residents or working holiday makers.

The threshold is the first bracket of the 2026-27 tax brackets, taxed at 0%. Income above it is taxed at 15% up to $45,000.

Two jobs and the tax-free threshold

Each employer withholds tax as if their job were your only income. If both apply the threshold, the first $18,200 is treated as tax free twice, so too little is withheld and you are likely to owe tax when you lodge. Claim it from one employer only. Most people choose the job that pays the most, but the job without the threshold is then taxed from its first dollar at the no-threshold rates, which can still leave you owing tax. The calculator above shows each option; if you will owe, you can ask an employer to withhold extra. To see what is withheld from each pay, use the tax withheld calculator, and to check the year as a whole, the tax return calculator.

Sources: ATO: individual income tax rates and ATO Schedule 1 withholding formulas. Maintained by James Crawford; last updated 21 October 2026. How our calculators work.

Frequently Asked Questions

What is the tax-free threshold?

The first $18,200 of taxable income that an Australian resident earns in a financial year is not taxed. Tax starts on income above $18,200.

Can I claim the tax-free threshold from two employers?

You can, but you usually should not. Each employer then withholds as if you only earn their pay, so too little tax comes out overall and you are likely to owe tax when you lodge. Claim it from one employer only. Most people choose the one that pays them most; the calculator on this page shows how each choice works out at tax time.

Can I claim the tax-free threshold if my total income is under $18,200?

Yes. If your income from all jobs will be $18,200 or less, you can claim it from each employer, and little or no tax will be withheld.

Do foreign residents and working holiday makers get the tax-free threshold?

No. Foreign residents pay tax from the first dollar of Australian income, and working holiday makers pay 15% from the first dollar up to $45,000. Part-year residents get a reduced threshold.

How do I claim or stop claiming the tax-free threshold?

You choose on the tax file number declaration you give each employer when you start. To change it later, give your employer a new withholding declaration.