AU EOFY Tax Return Estimator 2025-26

How Your 2025-26 Australian Tax Is Calculated

Australia uses a progressive income tax system administered by the ATO (Australian Taxation Office). Your tax liability for the 2025-26 financial year (1 July 2025 – 30 June 2026) is calculated on your taxable income — that is, your gross income minus allowable deductions. The resulting tax is further reduced by offsets such as the Low Income Tax Offset (LITO), then Medicare Levy and any surcharges are added.

The 2025-26 resident tax brackets are: 0% on the first $18,200; 19% on $18,201–$45,000; 32.5% on $45,001–$120,000; 37% on $120,001–$180,000; and 45% on income above $180,000. These rates apply to Australian tax residents only. Foreign residents use different rates and are not eligible for the tax-free threshold or LITO.

At the end of the financial year, your employer reports your total earnings and PAYG withholding to the ATO. If too much tax was withheld throughout the year, you receive a refund. If not enough was withheld — common for those with multiple jobs or investment income — you will have a tax debt. You can start lodging your return from 1 July 2025 via myTax.

What Deductions Can You Claim at EOFY?

Claiming all eligible deductions is the most effective way to legally reduce your taxable income. Common deductions for employees in 2025-26 include:

• Work-from-home (WFH): 67 cents per hour under the ATO fixed rate method. You need a diary or timesheet record of actual WFH hours across the entire year. This covers electricity, internet, and phone usage proportional to work.
• Work uniforms and protective clothing: If your employer requires a specific uniform or you need protective clothing, the cost of purchase and laundering is deductible.
• Tools and equipment: Tools, technology, and equipment used for work purposes. Items under $300 can be claimed in full; over $300 must be depreciated.
• Professional development: Training, courses, and conferences directly related to your current job are deductible. This does not cover courses to qualify for a new career.
• Vehicle expenses: Work-related car travel (not commuting to/from work). Use the cents-per-km method (88 cents/km for 2025-26) or logbook method.
• Union fees and professional association subscriptions: Fully deductible if membership is work-related.

Remember: you must keep receipts and records for all deductions claimed. The ATO's myDeductions app is a practical way to record these throughout the year. You cannot claim private expenses, even if partially work-related.

Understanding Your Tax Refund or Bill

Your EOFY outcome depends on how much PAYG tax your employer withheld versus your actual tax liability. Most Australian employees receive a refund because employers typically withhold slightly more than required to account for variable overtime or bonuses throughout the year.

Key factors that commonly produce a larger refund: claiming legitimate deductions you did not account for in your PAYG withholding variation; having work-related expenses that reduce your taxable income; receiving the Low Income Tax Offset applied at year-end rather than spread throughout the year.

Factors that can produce an amount owing: having multiple income sources where combined tax withheld is too low; investment income, rental income, or freelance work not subject to PAYG withholding; bank interest or dividends not taxed at source; or a HECS/HELP repayment liability.

If you owe tax, the ATO will notify you of a payment due date (usually 21 days after lodgment or November 21 for self-lodgers). You can set up a payment plan if needed via the ATO website.

EOFY Tax Checklist — What to Prepare

To lodge your 2025-26 tax return accurately, gather the following before visiting myTax or your tax agent:

• Income summary: Your payment summary or income statement from myGov showing salary, allowances, and PAYG withheld. Available after 14 July 2025 once employers report.
• Bank interest statements: Annual interest earned from savings accounts (pre-filled in myTax if your TFN is linked to the bank).
• Dividend statements: Annual tax statements from share investments including franking credits.
• Rental property records: Rental income received and all deductible expenses including interest, rates, insurance, repairs, and depreciation schedule.
• Work deduction receipts: All receipts for WFH equipment, uniform, tools, subscriptions, and professional development — minimum $300 total before receipts are required per item.
• Private health insurance certificate: Your insurer provides this annually — needed to confirm private hospital cover for Medicare Levy Surcharge purposes.
• HECS/HELP balance: Confirmed via ATO online services; your repayment obligation depends on repayment income, not just salary.

The myTax portal pre-fills most information by late July. Lodging from 1 August onwards (after data is fully loaded) reduces errors and processing time. The deadline for self-lodging is 31 October 2025. Tax agents typically have extended deadlines but must be engaged before 31 October.