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Company, Business and Corporate Tax Rates in Australia: ATO and Marginal Rates

Corporate Tax

Understanding how tax works in Australia can be difficult, especially when dealing with separate requirements for individuals, businesses, and foreign residents. The good news is that once you understand the structure, it is much easier to anticipate how much tax you will have to pay.

In this article, we examine the most recent Australian tax rates for 2026, including income tax, corporation tax, capital gains tax, and payroll tax.

Let’s break down each type of tax so you can clearly understand how they apply in 2026.

Australia Tax Rates 2026: Company, Business & Individual Tax Overview

Here’s a snapshot of the key tax rates in Australia:

  • Company tax rate: 25% (base rate entities) / 30% (others)
  • Individual tax rates: 0% to 45% (updated brackets from July 2024)
  • Capital gains tax: Taxed at marginal rates (0%–45%), with 50% discount for eligible assets
  • Non-resident tax rates: 32.5% to 45% (no tax-free threshold)
  • Payroll tax: ~4.75% to 6.85% (varies by state)

How the Australian Tax System Works

Australia has a progressive tax system, which means that your income is taxed in increments rather than at a flat rate.A common misunderstanding is that earning more money raises your overall income to a higher tax rate. In actuality, just the amount of income above each threshold is taxed at the higher rate.To make this clearer, here are the current income tax thresholds in Australia:
  • The first $18,200 is tax-free (tax-free threshold)
  • Income from $18,201 to $45,000 is taxed at 19%
  • Income from $45,001 to $120,000 is taxed at 32.5%
  • Higher brackets apply beyond this
So, if you earn $70,000:
  • The first $18,200 is tax-free
  • The next $26,800 is taxed at 19%
  • The remaining $25,000 is taxed at 32.5%
This step-by-step structure makes it clear that each portion of income is taxed at its respective rate, not your total income at a single higher rate. Because these calculations can get complex, many individuals and businesses turn to outsourced tax services for accurate reporting and smarter tax planning.

What are Marginal Tax Rates in Australia?

Your marginal tax rates Australia is the rate applied to your highest portion of income, not your total earnings.

For example, if you earn $50,000:

  • You don’t pay 30% on the full amount
  • Only the income above $45,000 is taxed at 30%

This is one of the most important concepts to understand when evaluating salary increases or tax planning.

ATO Personal Income Tax Rates Explained

The ATO personal tax rates vary based on your residency status. Understanding this difference helps you apply the correct tax rates and avoid confusion.

Resident Taxpayers

If you are an Australian resident for tax purposes, you benefit from:

  • Tax-free threshold
  • Lower starting tax rates
  • Medicare levy applies

Resident Tax Rates (excluding Medicare levy)

Income Range

Tax Rate

$0 – $18,200

0%

$18,201 – $45,000

16%

$45,001 – $135,000

30%

$135,001 – $190,000

37%

$190,001+

45%

Non-Resident Taxpayers

If you are a non-resident, the rules are different:

  • No tax-free threshold
  • Higher starting tax rate
  • Usually no Medicare levy

Non-Resident Tax Rates

Income RangeTax Rate
$0 – $135,00030%
$135,001 – $190,00037%
$190,001+45%
These non-resident tax rates Australia are significantly different from resident rates, which is why correct classification is essential.Understanding your residency status is crucial for applying the correct resident tax rates in Australia, as it directly impacts how much tax you pay and whether additional levies apply.For a more detailed breakdown of how tax is calculated on each income level, you can refer to the Australian Taxation Office tax tables.

Company Tax Rate Australia & Corporate Tax Rates Explained

The company tax rate Australia depends on the size and structure of your business.
Business TypeTax Rate
Base rate entities (small businesses)25%
Large companies30%
These are the standard Australian corporate tax rate rules.

What is a base rate entity?

To qualify for the lower 25% rate:

  • Annual turnover must be below the threshold
  • Passive income must be limited

This reduced corporate tax Australia rate is designed to support smaller businesses and encourage growth.

Small Business Tax Rates Australia (Reduced Company Tax Explained)

The small business tax rates Australia currently stand at 25%, making it more favourable compared to larger corporations.

Why this matters:

  • Lower tax burden improves cash flow
  • Encourages reinvestment
  • Supports business expansion

Many growing businesses choose to streamline compliance by working with an experienced outsourcing company to manage accounting, reporting, and tax obligations efficiently.

Capital Gains Tax Rate in Australia

The capital gain tax rate in Australia is not a separate tax. Instead, capital gains are added to your taxable income and taxed at your marginal rate.

Many SMEs, such as restaurants, salons, clinics, and developers, prefer to engage with tax accountants for small businesses to manage these tasks more efficiently and avoid the chance of errors.

Key points:

  • Applies when you sell assets (shares, property, etc.)
  • Individuals may receive a 50% CGT discount if the asset is held for more than 12 months, according to the capital gains tax rules in Australia.

Example:

If you make a $20,000 gain:

  • Only $10,000 may be taxable (after discount)
  • This amount is added to your income and taxed accordingly

To better understand how this works in detail, you can refer to our guide on capital gains tax rules in Australia.

Payroll Tax Australia Rates for Employers (State-Wise Overview)

Payroll tax Australia rates are set by individual states and apply to employers, not employees.

Typical rates:

  • New South Wales: ~5.45%
  • Victoria: ~4.85% to 6.85%
  • Queensland: ~4.75%

Important points:

  • Only applies above certain wage thresholds
  • Paid by businesses, not deducted from employee salaries

Resident and Non-Resident Tax Rates

Category

Tax Range

Key Notes

Individual (Resident)

0% – 45%

Includes tax-free threshold

Non-Resident

30% – 45%

No threshold, higher base rate

Company

25% – 30%

Fixed corporate rates

Practical Tax Tips for 2026

Here are some simple ways to manage your taxes more effectively:

  • Make full use of the tax-free threshold
  • Understand how marginal tax impacts additional income
  • Plan asset sales to optimise capital gains tax
  • Ensure proper business structuring

Getting the right advice can make tax simpler and help you avoid overpaying.

Final Thoughts

Australia’s tax system can feel confusing at first, but once you understand how the different tax rates work, it becomes much easier to manage.

Whether you’re an individual, a business owner, or a foreign resident, keeping up with the latest tax rates helps you plan better and avoid surprises.

If handling taxes still feels stressful, getting help from experienced professionals can make things simpler and ensure everything is done correctly and on time.

Get in touch today to simplify your tax process and stay fully compliant with confidence.

FAQs

What is the current company tax rate in Australia?

The company tax rate is 25% for small businesses and 30% for large companies.

Marginal tax rates refer to the rate applied to the highest portion of your income, not your total earnings.

Yes, non-residents generally pay higher tax rates and do not receive the tax-free threshold.

Capital gains are added to your taxable income and taxed at your marginal rate, often with a 50% discount for individuals.

Australia uses a progressive tax system with rates ranging from 0% to 45% depending on income levels.