A worked example
Jade is a registered nurse in Melbourne earning $85,000 a year. She paid $16,200 in PAYG tax throughout the year, claimed $2,400 in work-related deductions (uniforms, car travel to different hospital sites, registration fees), and has no private health insurance.
Her taxable income after deductions is $82,600 ($85,000 minus $2,400). On this amount, the 2025-26 rates give her income tax of $15,568 ($4,288 on the first $45,000, plus 30% of the remaining $37,600). Add the 2% Medicare levy on $82,600 ($1,652) and her total is $17,220. The Low Income Tax Offset phases out completely at $66,667, so Jade gets nothing from LITO. The Low and Middle Income Tax Offset (LMITO) ended in 2022, so that doesn't apply either.
Total tax owed: $17,220. She's already paid $16,200 through PAYG withholding, so she owes the ATO around $1,020. Not the refund she hoped for, but also not the disaster a big shortfall would be. She'll need to pay the difference by the due date on her notice of assessment, typically late October or early November if she lodges in July.
State-by-state differences
Income tax in Australia is federal, administered by the ATO, so the core tax rates and offsets don't change whether you live in NSW, Victoria, Queensland, WA, SA, Tasmania, the ACT or the NT. Your refund or amount owing is calculated identically across all states.
- NSW, VIC, QLD: No state-based income tax variations. Payroll tax exists but that's paid by employers, not employees.
- WA: Same federal tax system. If you work in mining or remote areas, you may have additional deductions for travel or living-away-from-home allowances, which affect your refund.
- SA, TAS: Identical tax treatment. Some Tasmanians working in seasonal industries (agriculture, tourism) may have irregular PAYG withholding, leading to larger refunds or debts.
- ACT: Public servants often salary sacrifice, which reduces taxable income but isn't captured in basic calculators.
- NT: Zone tax offset applies if you lived in a remote zone for more than half the year (up to $1,173 for zone A, $338 for zone B as at 2025-26), which increases your refund.
The main variation comes from work-related deductions specific to your industry and how much PAYG your employer withheld, not your postcode.
Common mistakes people make
- Assuming all expenses are deductible. You can't claim personal grooming, regular clothes (even if you only wear them to work), or travel from home to your usual workplace. The ATO only allows deductions for things directly earning your income, like specific tools, union fees, or travel between work sites. Keep receipts and check the ATO's occupation guides before claiming.
- Forgetting the $300 threshold for substantiation. Many people claim work expenses without receipts because they've heard about the $300 rule. That's wrong. You need records for everything. The $300 threshold means you don't need written evidence from suppliers for claims under $300 total, but you still need to show the ATO you spent the money if audited.
- Not accounting for HELP/HECS repayments. Your tax return estimator shows income tax, but if you earn over $67,000 (2025-26 threshold), you'll also owe HELP repayments on top. A teacher earning $75,000 might expect a $1,200 refund, then discover $1,500 in HELP deductions, leaving them with a debt instead.
- Ignoring the Medicare Levy Surcharge. If you earn over $101,000 (singles) or $202,000 (families) without private hospital cover, you pay an extra 1-1.5% surcharge. This isn't income tax and often surprises people who've never hit that threshold before.
What this calculator doesn't account for
This calculator gives you a ballpark figure based on standard PAYG employment. It doesn't account for:
- Salary sacrificing arrangements (superannuation, novated leases), which reduce your taxable income
- Fringe benefits tax (FBT) on things like work cars or employer-provided housing
- Capital gains from selling property or shares during the year
- Rental property income and negative gearing deductions
- Trust distributions, partnership income, or sole trader business income
- Foreign income or non-resident tax rates
- Government payments like JobSeeker, Carer Payment, or Family Tax Benefit that may be taxable or affect offsets
- Private health insurance rebate adjustments or Medicare Levy exemptions
- Division 293 tax on super contributions for high earners (income above $250,000)
If any of these apply, your actual refund or debt will differ. Use the ATO's official tax withheld calculator or see an accountant for complex situations.
Edge cases and nuances
Multiple jobs or changed jobs mid-year: If you had two jobs at once or switched employers, each one withholds tax as if it's your only income. You might have $15,000 withheld across both jobs but actually owe $18,000 because your combined income pushed you into a higher bracket. Always declare all employers on your return.
Working holiday makers (417/462 visas): You're taxed at 15% on the first $45,000 with no tax-free threshold. If your employer withheld as a resident, you'll owe thousands. If you left Australia mid-year, you need to lodge a departing Australia return with different rules.
Spouse income affecting offsets: The Low Income Tax Offset (LITO) is individual, but things like the private health insurance rebate or Family Tax Benefit depend on combined family income. A single parent earning $50,000 gets full LITO, but if they partner with someone earning $120,000, their Medicare Levy Surcharge and rebate settings change entirely.
Superannuation guarantee shortfall: If your employer didn't pay the full 12% super (2025-26 rate), you can't just claim it as a deduction. You report it to the ATO separately, and it doesn't affect your income tax refund directly.
