A worked example
Sarah lives in Brisbane and earns $75,000 per year as a marketing coordinator. She's paid fortnightly, so each pay is $2,884.62 before tax. She's an Australian resident for tax purposes and claims the tax-free threshold on her TFN declaration. She has no HELP or student loan debt.
Using the ATO's fortnightly tax table for 2025-26, roughly $568 is withheld per pay (the exact coefficient comes from the ATO's published schedule, not a simple bracket calc). Over the year, that's around $14,768 in total PAYG withholding including the 2% Medicare levy.
Sarah's actual tax liability on $75,000 for the year is $13,288 income tax plus $1,500 Medicare levy, totalling $14,788. PAYG withholding lands very close to her final bill, so her refund or top-up should be small, with most of the swing coming from any deductions she claims.
State-by-state differences
PAYG withholding is calculated using federal ATO schedules, so the base rates are identical across all states and territories. Whether you work in Sydney, Melbourne, Perth, or Darwin, the same tax tables apply.
- NSW, VIC, QLD, WA, SA, TAS, ACT, NT: All use the same ATO withholding schedules. Your state of residence doesn't change how much tax is withheld from your pay.
- Income bands: The withholding amount varies sharply across brackets. In 2025-26, weekly earnings up to $359 have no tax withheld (if claiming the threshold). Above $3,461 per week, the top marginal rate of 45% applies plus the 2% Medicare levy.
- Medicare levy variation: If you're exempt from the Medicare levy (e.g., some temporary visa holders), different withholding schedules apply. Your employer needs the correct TFN declaration form to withhold the right amount.
- Regional allowances: Some awards include zone allowances for remote areas in WA, NT, and Far North Queensland. These are taxable income, so they increase the withholding amount even though they offset higher living costs.
Common mistakes people make
- Claiming the tax-free threshold from multiple jobs: You should only claim it on one TFN declaration, usually your main job. If you claim it on two part-time jobs earning $30,000 each, barely any tax is withheld, but you'll owe around $11,000 when you lodge your return because your combined income is $60,000.
- Ignoring HELP debt on the TFN declaration: If you tick 'no' to HELP debt but actually owe $25,000, your employer won't withhold the extra compulsory repayment amounts. You'll face a tax bill of several thousand dollars at year-end. Always declare your HELP debt status accurately.
- Assuming withholding equals final tax: PAYG is an estimate based on annualised income. If you work casually or have variable hours, your actual tax depends on your total income for the full financial year, not what's withheld pay-to-pay. You might get a refund or owe more.
- Not updating declarations after life changes: Got a second job? Paid off your HELP debt? You need to submit a new TFN declaration. Your employer can't adjust withholding without the updated paperwork, even if you mention it verbally.
What this calculator doesn't account for
This calculator uses standard ATO withholding schedules and doesn't account for several real-world complications. It won't calculate correctly if you receive lump sum payments like bonuses, back pay, or employment termination payments, which use different tax tables (Schedule 5 for lump sums). Salary packaging arrangements, including novated leases and meal entertainment benefits, reduce your taxable income but the calculator assumes gross wages only.
It also doesn't cover the Seniors and Pensioners Tax Offset (SAPTO), which changes withholding for eligible people over Age Pension age. If you're a non-resident for tax purposes, completely different schedules apply with no tax-free threshold. The calculator assumes you've completed a standard TFN declaration; if you haven't provided your TFN to your employer, they must withhold 47% regardless of your actual income level. Finally, it doesn't predict your final tax position after deductions, offsets, or other income sources like investment returns.
Edge cases and nuances
Working holiday makers on 417 or 462 visas have special withholding rates: 15% up to $45,000, then standard resident rates above that (as of 2025-26). If your employer treats you as a standard non-resident, you'll be overtaxed and need to claim it back.
If your income exceeds $250,000 and you have a defined benefit super scheme, Division 293 tax applies, but this isn't withheld from your pay. You'll get a separate assessment from the ATO later. Similarly, the Medicare levy surcharge for high earners without private health cover isn't withheld; you pay it at tax time.
Employees with multiple jobs who earn under $18,200 combined sometimes claim the threshold on all jobs to avoid withholding, then wonder why they owe Medicare levy (2% of total income). The tax-free threshold doesn't exempt you from Medicare levy.
If you start a job part-way through the year after a period of low income, your employer withholds based on annualising your current pay rate. You might be overwithholding because they don't know you only worked three months of the financial year. The ATO reconciles this when you lodge, but it affects your cash flow until then.
