PAYG withholding, 2026-27
Why your payslip differs from your tax bill
The tax taken from each pay is an estimate worked out with the ATO's withholding formulas. The tax you finally owe is worked out on your whole year's income when you lodge your return.
Your employer uses the ATO's formula, rounded each pay
For each pay, your employer turns your earnings into a weekly figure, keeps the whole dollars and adds 99 cents. Tax is then a × earnings − b, with a and b from the ATO's table for that earnings band, rounded to the nearest dollar. With the tax-free threshold claimed this is scale 2, which builds in the Medicare levy. ATO: Schedule 1, using a formula; ATO: Schedule 1 coefficients for weekly payments.
On $60,000 a year, a fortnight's pay is $2,307.69. Half of that, in whole dollars, is $1,153, so the weekly figure is $1,153.99. Scale 2 gives 0.3227 × $1,153.99 − $185.1935 = $187.19, rounded to $187, or $374 a fortnight. Over 26 fortnights that is $9,724, while the tax for the year, after the $1,000 standard deduction and the low income tax offset and with the Medicare levy, is $9,285.00. About $439 would come back when you lodge.
Monthly pay is converted to a weekly figure
For monthly pay, the employer multiplies the monthly earnings by 3 and divides by 13 (adding a cent first if the amount ends in 33 cents), works out the weekly amount, then multiplies it by 13, divides by 3 and rounds to the dollar. ATO: Schedule 1, working out the weekly earnings.
What each salary withholds against what it owes
| Salary | Withheld a fortnight | Withheld over 26 fortnights | Tax owed for 2026-27 | At tax time |
|---|---|---|---|---|
| $40,000 | $154 | $4,004 | $3,275.00 | $729 back |
| $60,000 | $374 | $9,724 | $9,285.00 | $439 back |
| $80,000 | $622 | $16,172 | $15,800.00 | $372 back |
| $100,000 | $868 | $22,568 | $22,200.00 | $368 back |
| $120,000 | $1,114 | $28,964 | $28,600.00 | $364 back |
| $150,000 | $1,524 | $39,624 | $39,180.00 | $444 back |
| $200,000 | $2,304 | $59,904 | $59,400.00 | $504 back |
Resident, tax-free threshold claimed, the $1,000 standard deduction and no other deductions, no HELP, appropriate private hospital cover (no Medicare levy surcharge), no other income.
Bigger gaps, and why
- The $1,000 standard deduction: it comes off your taxable income when you lodge. The ATO's 2026-27 withholding formulas were published on 17 June 2026, before the law that created the deduction received assent on 26 June 2026, and as far as we can tell they do not allow for it. So in 2026-27 more of the tax withheld comes back than in earlier years: about $1,000 times your top tax rate plus the Medicare levy. Treasury Laws Amendment (Tax Reform No. 1) Act 2026; ATO: Standard deduction for work-related expenses.
- Not claiming the tax-free threshold: you should claim it from one employer only. A second employer withholds on scale 1, which takes tax from the first dollar. If that job is your only income, the extra comes back when you lodge.
- The Medicare levy surcharge: it is not in the standard withholding scales, so without hospital cover above $105,000 it is charged when you lodge, unless you ask your employer to withhold more.
- A study loan: employers add a separate component under Schedule 8, which is an estimate of your compulsory repayment. ATO: Schedule 8, study and training support loans components.
- Salary sacrifice: it lowers the pay that tax is withheld from, and your tax.
- 27 fortnightly pays: withholding assumes 26 fortnights or 52 weeks. In a year with 27 fortnightly or 53 weekly pays you can ask your employer to withhold a little extra, as below.
- Deductions and other income: work-related expenses above the $1,000 standard deduction lower the tax you owe at the end of the year; bank interest and other income raise it.
| Fortnightly earnings, 27 pays | Extra a fortnight |
|---|---|
| $1,700 to $5,199 | $12 |
| $5,200 to $7,249 | $27 |
| $7,250 and over | $48 |
| Weekly earnings, 53 pays | Extra a week |
|---|---|
| $875 to $2,574 | $3 |
| $2,575 to $3,649 | $7 |
| $3,650 and over | $12 |
From the ATO's Schedule 1, which applies from 1 July 2026. ATO: Schedule 1, using a formula.
See your payslip and your tax for the year.
These figures are estimates based on the information you entered and the 2026-27 rates and thresholds published by the Australian Taxation Office, with the Medicare levy low-income thresholds for 2025-26, the latest published. They are general information, not tax, financial or legal advice. Your actual pay and tax can differ, for example because of other income, deductions, your family situation, allowances, salary packaging or how your employer runs payroll. Check your payslip, or ask your employer, a registered tax agent or the ATO, before relying on them.