Work out your low income tax offset for 2026–27 and the income tax left after it.
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Key facts
- The low income tax offset (LITO) is up to $700 a year for Australian residents.
- You get the full $700 on taxable income of $37,500 or less.
- Between $37,500 and $45,000 it reduces by 5 cents per dollar, to $325; from $45,000 to $66,667 it reduces by 1.5 cents per dollar.
- With LITO, you pay no income tax on taxable income up to about $22,867 in 2026–27 (the Medicare levy may still apply).
- It's applied automatically when you lodge your tax return and can reduce your tax to $0, but isn't refunded beyond that.
Low income tax offset by income
| Taxable income | LITO | Income tax after LITO |
|---|---|---|
| $18,200 | $700.00 | $0.00 |
| $25,000 | $700.00 | $320.00 |
| $30,000 | $700.00 | $1,070.00 |
| $37,500 | $700.00 | $2,195.00 |
| $40,000 | $575.00 | $2,695.00 |
| $45,000 | $325.00 | $3,695.00 |
| $50,000 | $250.00 | $5,270.00 |
| $55,000 | $175.00 | $6,845.00 |
| $60,000 | $100.00 | $8,420.00 |
| $66,667 | $0.00 | $10,520.10 |
2026–27 resident tax rates, before the Medicare levy.
Common questions
How much is the low income tax offset?
Up to $700. It's $700 for taxable income up to $37,500, then reduces until it ends at $66,667.
Do I need to claim LITO?
No. The ATO works it out when you lodge your tax return; it shows on your notice of assessment.
Is LITO included in the tax taken from my pay?
Yes, for most employees. The ATO's withholding formulas allow for it when you claim the tax-free threshold.
What income can I earn tax-free?
About $22,867 in 2026–27 once LITO is applied, though the Medicare levy can apply above its low-income threshold.
See also tax brackets and how much tax will I pay.
Source: ATO, Low income tax offset. Checked 22 October 2026.