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PAYG withholding is your employer's estimate of the income tax you'll owe, deducted from every pay and sent to the ATO on your behalf. It's calculated from published withholding schedules that convert your gross pay for the period into a tax amount, based on the details you gave on your TFN declaration.
Four things move it. Whether you claim the tax-free threshold (only with one employer at a time — claiming it twice is the classic cause of a tax bill). Your pay frequency, since the schedules annualise the period. Whether you have a study and training support loan such as HECS-HELP, which adds a repayment component once your income passes the threshold. And whether you've given a valid TFN at all — without one, your employer must withhold at the top rate of 47%.
The schedules assume your current pay continues unchanged all year. Irregular income, overtime, mid-year job changes, deductions, offsets like LITO, and private health cover all shift the real figure, so most people finish the year with a modest refund or bill. That's the system working as designed — withholding is an estimate, and the tax return is the reconciliation.
For 2026-27 the resident scale starts at 15% on income between $18,201 and $45,000 (down from 16%), so withholding on lower incomes is slightly lighter than last year — worth about $268 a year for anyone earning above $45,000.
What if I have two jobs? Claim the tax-free threshold with the higher-paying one only. The second job is withheld without it, which is why the rate on it looks steep — it's approximating your true marginal rate.
Can I change my withholding? You can lodge a withholding variation with the ATO if your circumstances mean too much is being withheld (for example, large negatively geared deductions), or ask for extra to be withheld voluntarily.
Does super come out of this? No. The 12% super guarantee is paid by your employer on top of your wage — and since 1 July 2026 it must be paid with each payday, not quarterly.
This calculator uses current published rates from Australian government and regulator sources. The result is an estimate for general guidance — it does not constitute personal financial advice. For decisions about your circumstances, consult a registered financial adviser, tax agent, or other professional. See editorial standards for how DecisionLab sources and updates its calculator data.
This estimate excludes the Low Income Tax Offset (LITO). If you are eligible, your tax may be lower and your take-home pay higher — LITO is worth up to $700 and phases out at $66,667. See the LITO calculator.