Australia’s company tax rate is 25% for base rate entities (turnover under $50M) or 30% for all others. Individual residents pay 16–45% on a progressive scale with an $18,200 tax-free threshold. Non-residents pay 30% from the first dollar with no tax-free threshold. Withholding tax on dividends to non-residents is 30% (or 5–15% under DTAs).
Australian Tax Rates 2025-26: Complete Guide for Companies and Individuals
Understanding Australia's tax rates is essential for any business operating in the country. This guide covers every tax rate that affects companies and individuals in Australia for the 2025-26 financial year (1 July 2025 to 30 June 2026), with specific guidance for foreign companies and non-resident individuals.
Company Tax Rate
Australian companies pay tax on their worldwide income at one of two rates:
| Entity Type | Tax Rate |
|---|---|
| Base rate entity | 25% |
| All other companies | 30% |
A company is a base rate entity if it meets both conditions:
- Aggregated turnover is less than $50 million for the income year
- 80% or less of assessable income is base rate entity passive income (dividends, royalties, rent, interest, net capital gains)
Most foreign-owned Australian subsidiaries with active trading operations will qualify for the 25% rate. The company tax rate has been stable since 2021-22 and no changes were announced in the 2025-26 Federal Budget.
Individual Resident Tax Rates
Australian tax residents pay tax on their worldwide income at progressive rates. These rates are unchanged from 2024-25, reflecting the Stage 3 tax cuts that took effect on 1 July 2024.
| Taxable Income | Tax on This Income | Effective Marginal Rate (incl. Medicare) |
|---|---|---|
| $0 – $18,200 | Nil | 0% |
| $18,201 – $45,000 | 16c for each $1 over $18,200 | 18% |
| $45,001 – $135,000 | $4,288 plus 30c for each $1 over $45,000 | 32% |
| $135,001 – $190,000 | $31,288 plus 37c for each $1 over $135,000 | 39% |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 | 47% |
The 2% Medicare levy is added on top of these rates for Australian residents (see Medicare Levy section below).
Low Income Tax Offset (LITO)
The Low Income Tax Offset reduces tax for individuals earning up to $66,667:
- Income up to $37,500: $700 offset (maximum)
- $37,501 to $45,000: reduces by 5c per $1 over $37,500
- $45,001 to $66,667: reduces by 1.5c per $1 over $45,000
With LITO, the effective tax-free threshold is $22,575 for 2025-26.
Tax Payable Examples (Resident, Including Medicare)
| Taxable Income | Tax Payable | Effective Rate |
|---|---|---|
| $50,000 | $7,967 | 15.9% |
| $80,000 | $16,967 | 21.2% |
| $100,000 | $22,967 | 23.0% |
| $150,000 | $37,838 | 25.2% |
| $200,000 | $56,938 | 28.5% |
Non-Resident (Foreign Individual) Tax Rates
Foreign residents for tax purposes pay higher rates and have no tax-free threshold – tax applies from the first dollar of Australian-sourced income. Non-residents do not pay the Medicare levy.
| Taxable Income | Tax on This Income |
|---|---|
| $0 – $135,000 | 30c for each $1 |
| $135,001 – $190,000 | $40,500 plus 37c for each $1 over $135,000 |
| $190,001 and over | $60,850 plus 45c for each $1 over $190,000 |
Resident vs Non-Resident Comparison
A foreign individual earning $100,000 from Australian sources pays approximately $30,000 in tax (30% flat). An Australian resident earning the same amount pays approximately $22,967 (including Medicare levy). The difference narrows at higher income levels due to the progressive rate structure.
Non-resident status is determined by the ATO based on several factors including domicile, duration of stay, and intention to reside in Australia. Directors and employees posted to Australia for extended periods may be treated as residents for tax purposes.
Working Holiday Maker Tax Rates
Visa subclass 417 (Working Holiday) and 462 (Work and Holiday) holders pay a special flat rate:
| Taxable Income | Tax on This Income |
|---|---|
| $0 – $45,000 | 15c for each $1 |
| $45,001 – $135,000 | $6,750 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $33,750 plus 37c for each $1 over $135,000 |
| $190,001 and over | $54,100 plus 45c for each $1 over $190,000 |
Employers must be registered as WHM employers with the ATO to withhold at these rates. Unregistered employers must withhold at the higher foreign resident rates (30% from the first dollar).
Withholding Tax on Payments to Non-Residents
When an Australian entity makes certain payments to overseas recipients, it must withhold tax at the following rates:
Default Rates (No Treaty)
| Payment Type | Withholding Rate |
|---|---|
| Unfranked dividends | 30% |
| Interest | 10% |
| Royalties | 30% |
| Fully franked dividends | Nil |
| Management/service fees | No specific WHT |
Australia does not impose a general withholding tax on pure management or service fees paid to non-residents. However, payments that constitute royalties (know-how, technical knowledge, IP licensing) are subject to royalty withholding tax.
Reduced Rates Under Double Tax Agreements
Australia has DTAs with over 40 countries. Reduced withholding rates apply for treaty countries:
| Country | Dividends | Participation Dividends | Interest | Royalties |
|---|---|---|---|---|
| United States | 15% | 5% (10%+ holding) | 10% | 5% |
| United Kingdom | 15% | 5% (10%+ holding) | 10% | 5% |
| Singapore | 15% | 0% (franked, 10%+ holding) | 10% | 10% |
| China (PRC) | 15% | 15% | 10% | 10% |
| Japan | 15% | 5% (10%+ holding) | 10% | 5% |
| India | 15% | 15% | 15% | 10-15% |
| Hong Kong | 30% | 30% | 10% | 30% |
Important: Australia and Hong Kong do not have a Double Tax Agreement despite the A-HKFTA free trade agreement. Hong Kong companies repatriating profits from Australia face the full 30% unfranked dividend withholding rate.
Capital Gains Tax
Capital gains are included in assessable income and taxed at the applicable income tax rate. A CGT discount may apply:
| Taxpayer Type | CGT Discount | Requirement |
|---|---|---|
| Australian resident individual | 50% | Asset held 12+ months |
| Complying super fund | 33.33% | Asset held 12+ months |
| Company | Nil | N/A |
| Non-resident individual | Nil | Assets acquired after 8 May 2012 |
Non-residents are only taxed on taxable Australian property (TAP):
- Direct interests in Australian real property
- Indirect interests (10%+ in an entity with majority Australian real property assets)
- Assets used in an Australian permanent establishment
Medicare Levy
The Medicare levy funds Australia's public health system. Only Australian residents pay it.
Rate
- 2% of taxable income
- Foreign residents and working holiday makers are exempt
Low-Income Thresholds 2025-26
These thresholds were increased by 4.7% in the 2025-26 Budget:
| Category | No Levy Below | Full 2% Above |
|---|---|---|
| Singles | $27,222 | $34,027 |
| Families | $45,907 | $57,383 |
| Seniors (single) | $43,020 | $53,775 |
| Seniors (family) | $59,886 | $74,857 |
Medicare Levy Surcharge
An additional surcharge applies if you earn above $101,000 (single) or $202,000 (family) and don't hold private hospital insurance:
| Income Tier | Singles | Families | MLS Rate |
|---|---|---|---|
| Tier 1 | $101,001 – $118,000 | $202,001 – $236,000 | 1.0% |
| Tier 2 | $118,001 – $158,000 | $236,001 – $316,000 | 1.25% |
| Tier 3 | $158,001+ | $316,001+ | 1.5% |
Superannuation Guarantee
Employers must contribute 12% of ordinary time earnings to an employee's superannuation fund from 1 July 2025 (increased from 11.5% in 2024-25). This applies to all employees including those on working holiday visas.
What Changed in 2025-26
| Item | 2024-25 | 2025-26 |
|---|---|---|
| Income tax rates | 16/30/37/45% | Unchanged |
| Company tax rate | 25%/30% | Unchanged |
| Superannuation guarantee | 11.5% | 12% |
| Medicare levy | 2% | Unchanged |
| MLS base threshold (single) | $97,000 | $101,000 |
| Medicare low-income (single) | $26,000 | $27,222 |
Coming in 2026-27: The 16% rate will reduce to 15% (saving up to $268/year), and further to 14% from 1 July 2027.
How ABR Can Help
Understanding your Australian tax obligations is only the first step. Australian Business Register helps foreign companies with:
- Company formation – register an Australian Pty Ltd (25% tax rate) from $900
- Resident director services – meet ASIC s201A requirements from $6,000/yr
- Taxation services – company tax returns, BAS lodgement, and ATO compliance
- GST registration – ABN and GST from $450
Request a free quote to discuss your Australian tax and compliance requirements.
All rates verified against ATO published data as at March 2026. Tax rates apply for the 2025-26 financial year (1 July 2025 to 30 June 2026). This guide is for general information only and does not constitute tax advice. Consult a registered tax agent for advice specific to your circumstances.