Understanding tax rates in Australia for 2025-26 is more important than ever for both individuals and businesses. In light of changing compliance rules, increased global competition, and upcoming tax changes, understanding when and how much to pay is crucial to staying ahead in the financial game.
Australia has a two-tier company tax system, where companies pay 25 to 30% of their corporate tax based on their size and structure. Meanwhile, tax is imposed on individuals in a progressive structure of 0% to 45%, together with the Medicare charge. On top of this, there is the impending boost in the amount of superannuation guarantee to 12%, and it is easy to understand why proper planning is much needed.
Determining the amount of money you pay in taxes depends not solely on tax rates, but also on how an organization invests, the business strategy it adopts, and its competitiveness in the global arena. This resource provides comprehensive details on tax rates in Australia for 2025-2026, including company and personal income tax, trusts, capital gains, and deadlines for purchases or sales.
The taxation system in Australia is mainly a federal one; that is, the Commonwealth Government imposes the income tax. States and territories do not levy income tax; instead, they impose other forms of duties, such as payroll tax and stamp duty.
Income taxes are the most significant revenue source for the government and are administered by the Australian Taxation Office (ATO). The income tax for corporations is 25% or 30%, depending on the company's eligibility, compared to that for individuals. Personal income tax has progressive levels, ranging from 0% to 45%, based on income. To top all this, there is a Medicare levy of 2% which is generally applicable.
In addition to these, there are the capital gains tax (CGT) charged on selling assets, superannuation taxes, and Fringe Benefits Tax (FBT) charged on worker benefits. Knowledge of these various elements provides the universal question: "What is the tax rate in Australia? It all depends on whether you are a business, a person, or a trust.
In 2025-26, the company tax rate in Australia will be the central focus. Most large corporations are subject to the standard corporate tax rate of 30%. Many smaller companies, though, can have the reduced base rate entity (BRE) 25 % rate of tax.
A business qualifies with this low rate in cases where:
It has a low aggregated turnover that is less than AUD 50 million.
Passive income (i.e., dividends, interest, rent, or capital gains) cannot be more than 80% of its assessable income.
Example:
Company A generates AUD 20 million annually, with 70% of its income coming from active trading. It qualifies for the 25% rate.
Company B has been generating 40 million AUD in revenue, but it makes passive investments that account for 90 % of its income. The lower turnover will not negatively impact it, as it will be taxed at 30 %.
Another significant component of the corporate tax system is franking credits. As companies remit tax, they can transfer such credits to shareholders in combination with dividends, thereby lowering the net taxation cost at the individual level.
To individuals, the Australian income tax system is progressive, as the basic income is taxed at a low rate, and higher incomes are placed in a higher tax category. It is this organization that renders personal tax planning important to both residents and non-residents.
Resident tax rates for 2025-26:
$0 - $18,200 - 0% (tax-free threshold)
$18,201 - $45,000 - 16%
$45,001 - $135,000 - 30%
$135,001 - $190,000 - 37%
$190,001 and above - 45%
A majority of the taxpayers are also subject to a 2% Medicare tax to pay for the publicly established healthcare system.
In the case of non-residents, the system is less generous, as there is no tax-free limit. Their rates start at 32.5 and increase gradually according to income levels. Such a distinction causes residency status to be a significant concern in the tax planning of expatriate and global employees.
As we move into the future, everything will become law. Starting 1 July 2026, the 16% bracket will decrease to 15%, and in 2027, it will further decrease to 14%, slightly relieving middle-income earners of their taxes.
The way structures are taxed differs significantly. Knowledge of the taxation of trusts, partnerships, and super funds will give the business and other investors a chance to plan their financial statements better.
Trusts: Trusts typically do not pay taxes. Instead, it is distributed as income to beneficiaries, and this is taxed at marginal tax rates. In case there is any appreciation in the income of the trust not distributed, it will be taxed at the highest 45 % rate; thus, it is essential to ensure that there is timely distribution of the same.
Partnerships: Partnerships are not regarded as separate taxable entities. Instead, each of the partners reports all the partner's block of the income (or loss) on their own tax return, and levies tax based on their own personal tax bracket.
Superannuation funds: During the accumulation phase, Superannuation income is taxed at a reduced rate of 15%. And when a member moves towards the retirement (drawdown) phase, the tax rate would fall to 0 on a long-term basis, and the benefits would be huge.
Another point that employers must consider is that there will be an increase in Superannuation Guarantee (SG), which is currently 11.5% to 12% as of 1 July 2025. This serves as a significant compliance aspect, as an inability to comply with superannuation draw obligations incurs substantial penalties imposed by the ATO.
The Capital Gains Tax (CGT) is another essential element of the tax system that takes effect when clients, businesses, or trusts sell or otherwise dispose of such properties as real estate, shares, or managed investments.
One of the concessions applicable to individuals and trusts is that, in the case of an asset held for over 12 months, a 50 % discount in CGT is available. American Express, and Inst.National Mds. v Fletcher, 1931, 541.--Could you pick up a $50,000 as profit, but you would not receive this as assessable earnings (as all meager $25,000).
This discount is not offered to companies. Their profits are subject to 100% corporate taxes (25% or 30%, depending on eligibility).
Non-residents must deal with more restrictive rules, have fewer opportunities to access CGT concessions, and may be subject to the withholding tax jurisdiction concerning sales of Australian real property.
Timing happy disposals is a standard tax planning option. The taxpayer can achieve this by selling assets in a year with lost income, thereby gaining a CGT relaxation due to a maximum liability.
Australia has a varied tax structure based on the type of entity. Businesses are charged a flat rate, individual taxes are charged by progressive rates, and tax benefits by trust are charged to approved beneficiaries. Superannuation funds offer a different level of concessional taxation. Below is a clear comparison:
|
Entity |
Tax Rate |
Key Notes |
|
Company (standard) |
30% |
A flat corporate rate applies to most large businesses. |
|
Base Rate Entity |
25% |
Applies if turnover < $50m and no more than 80% of income is passive. |
|
Individuals |
0% – 45% + Medicare levy (2%) |
Progressive brackets, higher rates for higher incomes. |
|
Trust |
Beneficiaries taxed at marginal rates |
Retained income is taxed at 45%. |
|
Superannuation Fund |
15% |
Reduced to 0% during the retirement (drawdown) phase. |
Predictable flat tax rates make financial predictions easy in companies. Nevertheless, much more flexibility can be achieved by individuals and trusts, utilizing strategies such as the CGT discount on long-held assets. This may involve flexibility, such as lowering the overall tax collected compared to corporate forms.
Tax obligations in Australia don’t end with knowing your rate — meeting compliance dates is just as critical. There are stringent deadlines for the lodgment of information, and failure to meet such deadlines leads to penalties and interest payments to the Australian Taxation Office (ATO).
Company tax returns: This filing must be completed between 31 October and 15 May, depending on whether you do it directly or through a registered tax agent.
Individual tax returns: Self-lodging due on 31 October. The due date for individuals who use a tax agent tends to be well past, often extending into May of the following year.
BAS (Business Activity Statements) and PAYG instalments: Filed on 28th October, 28th February, 28th April, and 28th July.
Maintaining a log of such dates is an instrument that enables companies and individuals to prevent any compliance risks. Late payment has not only fines but may also increase the level of scrutiny by the ATO. Use a tax rate calculator in Australia to estimate your liabilities in advance and plan for timely payments.
Whereas the Australian corporate tax rate currently stands at 25% on current high-rate entities and 30% on other entities in 2025-26, more reforms are still under negotiation.
Starting in July 2026, personal tax rates will shift, with the middle-income range decreasing from 16% to 15% in 2027 and then to 14% in 2028. This artificial downward adjustment will help reduce the cost-of-living stresses on people.
On the business front, the Productivity Commission (2025) has initiated a discussion on reducing the corporate tax rate to 20 %, with a possible addition of a new cash flow proposal. Although these changes are not yet enacted, they changes will make Australia more appealing to global investors.
However, concerns remain. Australia has a relatively high standard corporate tax rate (30%), which puts the country in the category of being the highest in the OECD, posing competitiveness concerns. The reduced rates would foster the development of businesses, but they could also impact government taxation.
Lastly, employers should be prepared for significant changes, including the Superannuation Guarantee (SG) increasing to 12% by July 2025. This step fortifies the savings of people in retirement, but it also increases payroll expenses for companies.
To sum it up, the tax rates in Australia differ significantly for individuals, companies, trusts, and trust funds. When companies are under 25% or 30 %, the tax is a flat rate; for individual persons, it becomes progressive; and for trusts, it delegates the responsibilities to beneficiaries. Superannuation is an essentially concessional asset, especially during the retirement stage, hence it is an essential aspect in long-term financial planning.
Complying is not a choice. Lodgment date, rate variances, and future changes, such as the 2026-27 income tax bracketation increases and the 12% Superannuation guarantee, are crucial for both businesses and individuals to meet the requirements of both the date and the rate.
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The ordinary rate of company tax is 30%, and qualified base rate entities are given a low tax rate of 25%.
An annual turnover of less than 50 million chains of the company, along with less than 80 % of passive income, will be taxed at a rate of 25%.
Franking credits provide the shareholder with a tax credit that the company has remitted, thereby preventing a tax liability on dividends.
The taxation of income by trusts is at the marginal rates of the beneficiaries. In contrast, the individual is taxed progressively, with no tax rates up to 45% and a 2% Medicare charge.
Companies will tend to maximize deductions, carefully characterize sales of assets, and utilize the franking credit and interests of trusts to achieve a better tax result.
