Free Payroll Calculator: All Tax Brackets Explained

Published April 2026 • 7 min read

Running payroll is one of the most important responsibilities for any Australian employer. Getting it wrong can mean penalties from the ATO, unhappy employees, and cash flow headaches. Yet many small business owners still rely on guesswork or expensive accounting software to calculate what they owe.

This guide breaks down the 2025-26 Australian tax brackets, PAYG withholding, superannuation guarantee, and Medicare levy so you can calculate employee payroll accurately and for free using BizziKit's Payroll Calculator.

2025-26 Australian Tax Brackets

The Australian tax system uses a progressive structure, meaning higher income is taxed at higher rates. Only the portion of income within each bracket is taxed at that bracket's rate, not your entire income. Here are the individual income tax rates for the 2025-26 financial year:

Understanding PAYG Withholding

Pay As You Go (PAYG) withholding is the system where employers deduct tax from employee wages before paying them. The amount withheld depends on the employee's income level, tax file number declaration, and whether they claim the tax-free threshold.

As an employer, you are legally required to:

• Register for PAYG withholding with the ATO before your first payment to employees
• Withhold the correct amount from each pay cycle (weekly, fortnightly, or monthly)
• Report and remit withheld amounts to the ATO via your Business Activity Statement (BAS)
• Provide payment summaries to employees at year end (now handled via Single Touch Payroll)

Superannuation Guarantee at 11.5%

The superannuation guarantee (SG) is the minimum amount employers must contribute to their employees' super funds. For the 2025-26 financial year, the SG rate is 11.5% of an employee's ordinary time earnings (OTE). This rate is legislated to increase to 12% from 1 July 2025 onwards.

Key points about super guarantee:

• Who is eligible: Most employees aged 18 and over, regardless of how much they earn. Employees under 18 must work more than 30 hours per week
• Ordinary time earnings: Includes salary, wages, commissions, shift loadings, and allowances. Does not include overtime payments
• Payment deadline: Super must be paid at least quarterly, by the 28th day after the end of each quarter
• Maximum contribution base: There is an upper limit on the earnings base used to calculate SG ($65,070 per quarter for 2025-26)

Medicare Levy and Surcharge

The Medicare levy funds Australia's public healthcare system. Most taxpayers pay the Medicare levy of 2% of their taxable income. This is in addition to the income tax rates shown above.

There are reduced levy rates and exemptions for lower-income earners:

• No levy: Taxable income at or below $26,000 for singles
• Reduced levy: Taxable income between $26,001 and $32,500 for singles (shade-in range)
• Full 2% levy: Taxable income above $32,500

The Medicare levy surcharge (MLS) is an additional charge of 1% to 1.5% for higher-income earners who do not hold private hospital cover. It applies to singles earning above $93,000 and families above $186,000.

The Tax-Free Threshold

The tax-free threshold is the amount of income you can earn before you start paying income tax. In Australia, this is $18,200 per year. Employees claim this threshold on their Tax File Number (TFN) declaration when they start a job.

Key rules to understand:

• An employee can only claim the tax-free threshold from one employer
• If they have multiple jobs, they should claim it from their primary employer (highest income)
• Employees who do not claim the threshold have tax withheld at a higher rate from the first dollar
• If no TFN is provided, you must withhold at the top marginal rate (45%) plus Medicare levy

Putting It All Together: A Payroll Example

Let's walk through a complete payroll calculation for a typical employee to show how all these components fit together.

How to Use BizziKit Payroll Calculator

BizziKit's free Payroll Calculator handles all of these calculations automatically. No sign-ups, no cloud uploads, and no subscription fees. Everything runs locally in your browser, keeping your employee data private.

Here is how to get started:

1. Open the HR Operations Suite from the BizziKit dashboard
2. Enter the employee's annual salary or hourly rate
3. Select the pay frequency (weekly, fortnightly, or monthly)
4. Indicate whether the employee claims the tax-free threshold
5. The calculator automatically computes PAYG withholding, super guarantee, Medicare levy, and net pay
6. Export pay slips as PDF or print them directly

Payroll does not have to be complicated or expensive. By understanding the tax brackets, PAYG withholding obligations, super guarantee rates, and Medicare levy, you can confidently manage employee pay. And with BizziKit's free tools, you can automate the math and focus on what matters: running your business.