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Sole trader tax rates 2026–27: free income tax calculator
From 1 July 2026 the second tax bracket dropped to 15%. Sole traders pay the same individual rates as everyone else, on their business profit plus any other income. Type your expected taxable income to estimate income tax, the low income tax offset and the Medicare levy.
Resident rates, full-year resident, full tax-free threshold. Includes the low income tax offset and the 2% Medicare levy with the single low-income reduction. The ATO hasn't published 2026–27 Medicare low-income thresholds yet, so the calculator uses the 2025–26 thresholds ($28,011 / $35,013). It excludes HELP repayments, the Medicare levy surcharge, family thresholds and other offsets.
2026–27 resident tax rates
| Taxable income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 15c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,370 plus 45c for each $1 over $190,000 |
These rates don't include the 2% Medicare levy. For 2025–26 the second bracket was 16c, so the same income pays a little less in 2026–27. Source: ATO, Tax rates – Australian resident.
Low income tax offset (LITO)
- Taxable income of $37,500 or less: $700.
- $37,501 to $45,000: $700 minus 5c for every $1 above $37,500.
- $45,001 to $66,667: $325 minus 1.5c for every $1 above $45,000.
It reduces tax payable to zero at most and isn't refundable. Source: ATO, Low income tax offset.
Worked examples (checked against the calculator)
| Taxable income | Tax | LITO | Medicare | Total |
|---|---|---|---|---|
| $30,000 | $1,770.00 | $700.00 | $198.90* | $1,268.90 |
| $60,000 | $8,520.00 | $100.00 | $1,200.00 | $9,620.00 |
| $100,000 | $20,520.00 | $0 | $2,000.00 | $22,520.00 |
| $200,000 | $55,870.00 | $0 | $4,000.00 | $59,870.00 |
*Reduced levy using the 2025–26 single thresholds (10% of income above $28,011, capped at 2%), because 2026–27 thresholds aren't published yet. Source: ATO, Medicare levy reduction for low-income earners.
What this means for a sole trader
Nobody withholds tax from your business income, so the bill arrives after you lodge. Use our tax set-aside calculator to turn this into a percentage of every payment, and read about PAYG instalments, which usually start after your first business return.
FAQ
What are the tax rates for 2026–27?
For Australian residents with the full tax-free threshold: nil to $18,200; 15c per $1 from $18,201 to $45,000; $4,020 plus 30c per $1 over $45,000 up to $135,000; $31,020 plus 37c per $1 over $135,000 up to $190,000; and $51,370 plus 45c per $1 over $190,000. The Medicare levy of 2% is on top (ATO).
Do sole traders pay a different tax rate?
No. As a sole trader you pay individual income tax rates on your taxable income (business profit plus any other income). You lodge an individual tax return with the business and professional items schedule (ATO).
Do I have to lodge a return if I earned under $18,200?
If you operate a business as a sole trader, the ATO says you must lodge a tax return even if your income is below the tax-free threshold.
Sources
- ATO: Tax rates – Australian resident (2026–27 table)
- ATO: Low income tax offset
- ATO: Medicare levy reduction for low-income earners (2025–26 thresholds)
- ATO: Income tax return (sole traders)
Last checked 16 Nov 2026. Rules and rates change; confirm on the official page before you rely on a figure.
Want it done for you? Aussie Sole Trader Toolkit 2026-27 (offline tool)
Our Sole Trader Toolkit works the 2026–27 rates into an hourly-rate planner, a tax set-aside estimator and an invoice maker, offline in your browser. Disclosure: it's our own product, so we earn money if you buy it. You don't need it to use the free calculator on this page.
- Works in any browser on computer, tablet or phone; no login or internet needed
- Your numbers stay on your device
- Warns you at the $75k GST threshold
- Flags when a $1,000+ invoice needs the buyer's ABN
US$12.99 one-time on Whop. Instant download.
See it on Whop →Related guides
- PAYG instalments for sole traders: when they start and how to calculate them
- BAS due dates 2026–27
- How much should I charge as a sole trader in Australia?
General information only, not financial, tax or legal advice. Check the official pages linked above, or ask a registered tax agent, before you rely on anything here. Last checked 16 Nov 2026.