Home/Calculators/LITO Calculator

How the Low Income Tax Offset works

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.

Related Calculators
SAPTO →Income Tax →Take-Home Pay →Medicare Levy →
Help Shape DecisionLab

Missing a calculator? Tell us what to build.

Suggest a calculator or tool you wish existed. We read every suggestion and build the most-requested ones — leave your email and we'll tell you when it's live.

Methodology & sources

Applies the FY 2025-26 LITO formula: $700 maximum for incomes up to $37,500; reduced by 5 cents per dollar between $37,500 and $45,000 (to $325); then by 1.5 cents per dollar between $45,000 and $66,667 (to $0). Tax shown is the FY 2025-26 individual income tax (Stage 3 brackets) before Medicare levy and any other offsets. LITO is non-refundable — the calculator caps the offset against tax payable when computing 'tax after LITO'. General information only and not personal financial advice.

How the Low Income Tax Offset works

The Low Income Tax Offset (LITO) is a tax offset, not a payment or a deduction. It reduces the tax you owe dollar-for-dollar, but only down to zero — it can't create a refund on its own. It's applied automatically by the ATO when you lodge; you don't claim it separately.

The amount and the taper

The maximum LITO is $700, and you get the full amount if your taxable income is $37,500 or less. Above that it phases out in two stages:

Taxable incomeLITO
Up to $37,500$700 (full)
$37,501 – $45,000$700 − 5c per $1 over $37,500
$45,001 – $66,667$325 − 1.5c per $1 over $45,000
$66,668 +Nil

So at $45,000 the offset has fallen to $325, and it disappears completely once your taxable income reaches $66,667.

Why it matters at the bottom of the scale

LITO works together with the tax-free threshold to lift the point at which you actually start paying tax. Because the first $18,200 is tax-free and LITO wipes out tax on the next slice, a person earning around $22,500 can end up paying no net income tax at all. For part-time and lower-income workers, LITO is often the difference between a small tax bill and none.

LITO vs other offsets

LITO is separate from SAPTO (for eligible seniors and pensioners) and from the Medicare levy reduction for low-income earners. You can receive more than one where you qualify, and they're applied in a set order. The old Low and Middle Income Tax Offset (LMITO) has ended — if you're comparing to an older refund, that's often why it looks smaller.

Frequently asked questions

Do I need to claim LITO? No — the ATO applies it automatically based on your taxable income when you lodge.

Can LITO give me money back if I paid no tax? No. As a non-refundable offset it can only reduce tax to zero; it can't be paid out as a refund by itself.

Does salary sacrificing affect my LITO? Yes — salary sacrifice lowers your taxable income, which can increase your LITO, one of several reasons contributing to super can be tax-effective at modest incomes.