From 1 July 2026, the tax rate on income between $18,201 and $45,000 fell from 16% to 15%, worth up to $268 a year, and it's legislated to fall to 14% from 1 July 2027. Most residents also pay the 2% Medicare levy on top.
Contractors and sole traders don't have tax withheld from most invoices, so they need to set money aside and, once their tax passes a threshold, pay quarterly PAYG instalments. GST registration is required once turnover reaches $75,000.
1. Income tax and Medicare
Tax for 2026-27, or 2025-26 for the return due by 31 October 2026, including the Low Income Tax Offset.
2. Rates and GST
Convert day rates, check your rate covers costs, and add or remove 10% GST.
- Day Rate Calculator: Day Rate to Hourly and AnnualConvert a contractor day rate to an hourly rate and annual income, or work back from an hourly rate or annual target to a day rate.
- Freelance Hourly Rate CalculatorWork out an hourly rate that actually covers your income goal, expenses, and self-employment tax, not just a guess.
- VAT and Sales Tax CalculatorAdd tax to a net price, or take it out of a price that already includes it. Works with any currency and any rate.
3. Save and invoice
Set aside tax from each payment and put clear due dates on invoices.
- Freelancer Tax Set-Aside CalculatorWork out how much of each client payment to put aside for income tax and social contributions, in any country, so the tax bill is never a surprise.
- Invoice Due Date Calculator (Net 30, Net 60)Find the exact due date for Net 7, Net 30, Net 60, EOM and 2/10 Net 30 payment terms, with the weekday and any early-payment discount.
Questions people ask
What are the Australian tax rates for 2026-27?
For residents: nil up to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above, plus the 2% Medicare levy.
When do I need to register for GST?
Once your GST turnover reaches $75,000 a year. You can register earlier voluntarily, which lets you claim GST credits on business purchases.
How much should a contractor put aside for tax?
Use the Australia Income Tax Calculator with your expected yearly income, divide the total by that income, and save that percentage of every invoice, plus GST if you're registered.