Australian freelancers usually trade as sole traders — which means there is no separate "freelancer tax". Your business profit is your personal taxable income, taxed at the same resident marginal rates as any employee, plus the 2% Medicare levy on top. The 2026–27 year brought a real change: the second bracket dropped from 16% to 15%, so last year's spreadsheet is already wrong.
Enter your taxable income (profit after business deductions, not revenue), whether you are registered for GST, and your GST turnover. The calculator applies the 2026–27 resident brackets — $0–$18,200 tax-free, then 15% / 30% / 37% / 45% — adds the 2% Medicare levy, and tells you whether you have crossed the A$75,000 GST registration threshold (measured on a rolling 12 months, not the financial year).
Two compliance habits separate calm Australian freelancers from stressed ones. First, PAYG instalments: after your first tax return, the ATO bills you quarterly based on last year's income — this calculator's total, divided by four, is roughly what those notices will say. Second, super: nobody withholds it for you, so voluntary contributions (generally deductible up to the concessional cap) are how sole traders avoid arriving at retirement with a decade of missing contributions. Model the tax here, then automate both habits.
Estimate only — not professional advice. This models income tax plus Medicare levy from the figures below; it does not model the Low Income Tax Offset, the Medicare levy reduction for low earners, HECS/HELP repayments, or deductions you may be entitled to. Tax law changes — figures verified 2026-09-25; confirm current rates with the ATO or a registered tax agent before lodging.
Key takeaways
- For 2026–27, resident rates are: $0–$18,200 nil, $18,201–$45,000 at 15%, $45,001–$135,000 at 30%, $135,001–$190,000 at 37%, and 45% above $190,000 — plus the 2% Medicare levy on top.
- The second bracket fell from 16% to 15% on 1 July 2026 — a freelancer earning $90,000 pays $268 less income tax than last year, before the levy.
- You must register for GST once current or projected GST turnover hits A$75,000 on a rolling 12-month basis — then 10% GST applies to your taxable sales.
- Sole traders pay tax on profit, not revenue: every legitimate business deduction (home office, equipment, professional memberships) shrinks taxable income first.
- Low earners may pay a reduced Medicare levy or none at all — this calculator applies the flat 2%, so treat its levy line as the maximum.
- Divide the annual total by four to preview your quarterly PAYG instalments — the ATO bills from last year's income, so this year's estimate is next year's notice.
How it works
- Enter your taxable income: total freelance profit after business deductions (home office, equipment, subscriptions, professional memberships) — not your gross revenue.
- The calculator applies the 2026–27 resident marginal rates: nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000, 45% above. Each rate hits only the slice of income inside its bracket.
- It adds the 2% Medicare levy on your full taxable income. Note: this is the maximum levy — singles earning under about $28,011 pay a reduced levy or none, which this estimate does not model.
- Enter your GST turnover (gross business income, rolling 12 months) and registration status. At A$75,000 or more of current or projected turnover, registration is compulsory within 21 days.
- The GST position line tells you whether you must register, are compliant, or are voluntarily registered — and reminds you that 10% GST then applies to taxable sales while you claim GST credits on business purchases.
- Use the total to set aside tax from every invoice: the <a href="/freelancer-tax-set-aside-calculator/">tax set-aside calculator</a> turns the annual figure into a per-payment habit.
- Divide the total by four: that is roughly your quarterly PAYG instalment once the ATO starts billing you — set calendar reminders so the notice never surprises you.
- Revisit the inputs after every quarter: income changes, and the A$75,000 GST test runs on a rolling 12 months, so a single big contract can flip your registration status mid-year.
Worked example
Worked example — A$90,000 taxable income, not GST-registered, A$60,000 turnover:
- Income tax: $0 on first $18,200 + 15% × $26,800 = $4,020 + 30% × $45,000 = $13,500 → A$17,520.00
- Medicare levy: 2% × $90,000 = A$1,800.00
- Total: A$19,320.00 — effective rate 21.5%
- GST: turnover A$60,000 is below A$75,000 → no registration required
Why the 2026–27 change matters: under 2025–26 rates the second bracket was 16%, so the same $90,000 income attracted $17,788 of income tax — $268 more. Small change, but it compounds across every invoice you price this year.
Second example — A$150,000 income, GST-registered, A$160,000 turnover: income tax = $4,020 + $27,000 + 37% × $15,000 = A$36,570.00; Medicare levy A$3,000.00; total A$39,570.00 (26.4% effective). GST turnover exceeds A$75,000 and the trader is registered — compliant, charging 10% GST on taxable sales and claiming credits on inputs.
Third example — A$45,000 income, not registered, A$40,000 turnover: income tax = 15% × $26,800 = A$4,020.00; Medicare levy A$900.00; total A$4,920.00 (10.9% effective). But note the LITO: at this income the Low Income Tax Offset (up to $700, phasing out by $66,667) applies automatically on lodgment — so the real bill is lower than this calculator shows. Treat the output as the conservative set-aside figure, and the offset as a pleasant surprise.
Frequently asked questions
What are the Australian income tax rates for 2026–27?
For residents: $0–$18,200 nil, $18,201–$45,000 at 15%, $45,001–$135,000 at 30%, $135,001–$190,000 at 37%, and 45% above $190,000 — plus the 2% Medicare levy. The 15% second-bracket rate (down from 16%) applies from 1 July 2026, and is legislated to fall again to 14% from 1 July 2027. Rates are marginal: each rate applies only to the income slice inside its bracket.
Do freelancers pay tax differently from employees in Australia?
No — the rates are identical. As a sole trader, your business profit is added to any other income and taxed at personal marginal rates. The differences are compliance-side: you pay via PAYG instalments through the year instead of employer withholding, you claim business deductions yourself, and you must handle your own GST and super obligations. There is no separate "freelancer tax" in Australia.
What is the Medicare levy and do I have to pay it?
The Medicare levy is 2% of taxable income paid on top of income tax by most residents. Low-income earners get relief: for 2026–27, singles with taxable income up to about $28,011 pay no levy, with a phase-in range above that. This calculator applies the flat 2%, so its levy line is the maximum you would pay — check the ATO's Medicare levy reduction rules if your income is modest.
When must I register for GST as a freelancer?
When your current or projected GST turnover reaches A$75,000 — measured on a rolling 12-month basis, not the financial year. "Projected" means you can be required to register before you have earned it, e.g. after signing a contract that will clearly take you past the line. You then have 21 days to register, must charge 10% GST on taxable sales, and can claim GST credits on business purchases via your BAS.
Is GST turnover the same as my profit?
No — it is gross business income (excluding GST itself, input-taxed sales, and sales not connected with Australia), not profit. A freelancer billing $80,000 with $30,000 of expenses has $50,000 of profit but $80,000 of GST turnover — and must register. This trips up many sole traders who watch their bank balance instead of their gross.
Should I register for GST voluntarily below $75,000?
Sometimes. Voluntary registration lets you claim GST credits on business purchases (equipment, software, subcontractors), which helps if your expenses carry a lot of GST. The cost: you must charge 10% GST on your sales — painful if your clients are consumers who cannot claim it back, but neutral if your clients are GST-registered businesses. Weigh the input credits against pricing friction before opting in.
What deductions can Australian sole traders claim?
Common ones: home office (fixed-rate or actual-cost method), equipment and depreciation, professional memberships and insurance, accounting fees, work-related travel, and a portion of phone/internet. Every dollar of legitimate deduction shrinks taxable income before the brackets apply — which is why this calculator asks for profit, not revenue. Keep records; the ATO data-matches aggressively.
What is the Low Income Tax Offset (LITO)?
An automatic offset of up to $700 for lower incomes, applied by the ATO when you lodge — no claim needed. It phases out between $37,501 and $66,667. It is not included in this calculator's figures, so if your income is under ~$66,000 your actual bill will be lower than shown here. (The larger LMITO ended in 2022 and no longer applies.)
How do I pay tax during the year as a sole trader?
Through the PAYG instalment system: after your first return, the ATO sends quarterly instalment notices based on your previous income. Many freelancers prefer to set aside a fixed percentage of every invoice instead — the tax set-aside calculator converts your annual estimate into a per-payment habit so the quarterly bill never stings.
Do I need to pay superannuation as a freelancer?
Not compulsorily — the super guarantee applies to employees, not sole traders. But skipping super entirely is the most common long-term mistake Australian freelancers make: consider voluntary contributions (which are generally tax-deductible up to the concessional cap) so you are not funding retirement purely from after-tax savings.
What changed on 1 July 2026?
Two things: the second-bracket rate fell from 16% to 15% (income $18,201–$45,000), saving up to $268 a year, and a further cut to 14% is legislated from 1 July 2027. Thresholds and other rates are unchanged. If your pricing spreadsheet or accounting software still uses 16%, update it — you are over-withholding.
Is this tax advice?
No — estimate only, not professional advice. This models 2026–27 resident income tax plus the flat 2% Medicare levy from ATO-published rates; it excludes offsets, levy reductions, HECS/HELP, deductions, and state-specific obligations. Tax law changes — figures verified 2026-09-25. Confirm anything you will lodge or rely on with the ATO or a registered tax agent.