The tax table is an official guide published by the Australian Taxation Office (ATO) that determines how much income tax should be withheld from an employee’s wages or salary.
It’s used by employers, accountants, and payroll systems to calculate Pay As You Go (PAYG) withholding — ensuring the correct amount of tax is deducted throughout the financial year.
In simple terms, the tax table ensures employees don’t pay too much or too little tax before lodging their annual tax return.
The 2025–26 Tax Table: Key Updates and Changes
The 2025–26 tax year introduces adjusted tax thresholds and rates, reflecting the final stage of the Stage 3 tax cuts announced by the Federal Government.
Here’s how the new ATO tax table breaks down for resident taxpayers from 1 July 2025:
| Taxable Income (2025–26) | Tax Rate | Tax Payable |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 + 30c for each $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 + 37c for each $1 over $135,000 |
| $190,001 and over | 45% | $51,638 + 45c for each $1 over $190,000 |
(Source: ATO – 2025–26 Tax Rates and Thresholds)
These changes are designed to provide income tax relief, particularly for middle-income earners.
How the 2025–26 Tax Table Impacts Individuals
1. Higher Take-Home Pay for Most Australians
The new tax brackets reduce marginal tax rates for a large portion of the workforce. For example:
- Someone earning $100,000 will save around $1,400 a year in tax compared to 2024–25.
- A person earning $150,000 could save over $3,700 annually.
The lower 30% tax band now extends up to $135,000, simplifying the structure and reducing bracket creep.
2. PAYG Withholding Adjustments
From 1 July 2025, employers must update payroll systems to the new ATO tax table so employees are taxed correctly.
If you’re using payroll software such as Xero, MYOB, or QuickBooks, updates will be automatically applied — but manual payroll users will need to download the latest tables from the ATO’s PAYG Withholding Schedules.
Impact on Employers and Payroll
1. Updating PAYG Withholding Systems
All Australian employers must ensure their PAYG systems reflect the 2025–26 ATO tax table by 1 July 2025.
Failure to do so can result in incorrect deductions and potential ATO penalties.
Employers should:
- Verify payroll software updates are complete;
- Cross-check early July pay runs;
- Ensure correct Tax File Number (TFN) declarations are on file for all staff.
2. Superannuation and Withholding Alignment
While the superannuation guarantee (SG) rate remains at 11.5% for 2025–26, payroll calculations must account for both SG and tax withholding.
If your business pays bonuses, commissions, or lump sums, use the ATO’s tax table for lump sum payments to calculate PAYG accurately.
3. Fringe Benefits and PAYG Variations
Employers providing non-cash benefits (cars, housing, etc.) should ensure fringe benefits are correctly reflected in taxable income estimates for PAYG purposes.
Insight Advisory Group can help ensure FBT and PAYG systems align to prevent costly errors.
Other Key ATO Tax Table Types
The ATO publishes multiple tax tables to suit different payment types and situations. The most common include:
- Tax Table for Regular Payments – Standard for wages and salaries
- Tax Table for Lump Sum Payments – Used for redundancy or leave payouts
- Tax Table for Weekly and Fortnightly Payers
- Tax Table for Superannuation Income Streams
- Tax Table for Back Payments
Employers must ensure they’re using the correct schedule depending on the employee’s circumstances — such as residency, working holiday status, or Medicare levy exemptions.
Medicare Levy and Other Considerations
The Medicare Levy (2% of taxable income) still applies to most residents, with low-income thresholds increasing slightly in 2025–26.
Employees with reduced or exempt status must complete a Medicare levy variation declaration form to ensure the correct PAYG rate applies.
You can find the current levy thresholds on the ATO’s Medicare Levy page.
How Insight Advisory Group Can Help
At Insight Advisory Group, we help individuals and businesses across Perth understand and implement the latest ATO tax table updates to ensure compliance and efficiency.
Our team provides:
- Payroll compliance checks
- PAYG withholding reviews
- Employee tax variation support
- Personal tax planning to maximise post-tax income
Whether you’re an employer updating payroll or an individual assessing your new take-home pay, our Perth-based tax advisors can help you navigate these changes.
Explore our Tax and Business Advisory Services or Contact Us to stay compliant and optimise your 2025–26 finances.
FAQs — 2025–26 ATO Tax Table
Q: When does the new tax table take effect?
A: From 1 July 2025, all employers must use the updated tax rates and thresholds.
Q: Who benefits most from the new tax table?
A: Middle-income earners earning between $45,000 and $135,000 will see the biggest tax savings.
Q: Do I need to update my payroll system manually?
A: Most modern payroll software updates automatically, but you should confirm settings before processing July pay runs.
Q: How does the tax table affect my weekly pay?
A: PAYG withholding will decrease for most employees, increasing net take-home pay.
Q: Are non-residents affected by the same rates?
A: No. Non-residents have separate withholding tables and don’t receive the $18,200 tax-free threshold.
Key Takeaways
- The 2025–26 ATO tax table introduces simplified brackets and lower rates.
- Employers must update payroll systems by 1 July 2025 to ensure accurate PAYG withholding.
- Middle-income earners will receive the largest tax savings.
- Businesses should verify PAYG compliance to avoid ATO penalties.
With the right advice from Insight Advisory Group, you can stay compliant, avoid errors, and maximise your post-tax position in the new financial year.
