The Low Income Tax Offset (LITO) is a non-refundable tax offset for Australian residents on lower taxable incomes. For FY 2025-26 the maximum offset is $700 for anyone with taxable income at or below $37,500. Above that the offset tapers in two stages: 5 cents off per dollar between $37,500 and $45,000 (taking it to $325), then 1.5 cents off per dollar between $45,000 and $66,667 (taking it to $0). LITO is automatically applied when you lodge — you don't claim it separately.

LITO is the surviving half of the old LITO + LMITO duo. The Low and Middle Income Tax Offset (LMITO) finished after the 2021-22 income year and was not renewed; the LITO continues. Combined with the $18,200 tax-free threshold, full LITO lifts the practical no-tax point to around $22,575 of taxable income for a person with no other offsets. SAPTO eligibility (for age-pension-age people) stacks on top — see our SAPTO Calculator.

Because LITO is non-refundable, it can reduce your tax payable to zero but won't generate a refund of itself. If your tax payable is below your LITO entitlement, the unused portion is lost (it cannot be transferred or carried forward). For the full tax picture see our Income Tax Calculator or Take-Home Pay Calculator.