Work out the tax on your sole trader or ABN business profit for 2026–27, including the small business income tax offset, and how much of each dollar to set aside.
Key facts
- As a sole trader, your business profit (income less deductible expenses) is added to any other income and taxed at the individual rates, plus the Medicare levy.
- No tax is withheld from ABN income, so set money aside: on a $75,000 profit with no other income, about 18.0% ($13,520) in 2026–27.
- The small business income tax offset is 16% of the tax on your net small business income, up to $1,000 a year, for businesses with turnover under $5,000,000.
- You must register for GST once your business turnover is $75,000 or more a year (taxi and ride-share drivers regardless of turnover).
- Income tax on business profit is paid when you lodge, or through PAYG instalments once the ATO puts you in the system.
How it's worked out
- Profit = business income (excluding GST) − business expenses; taxable income = profit + other income.
- Income tax at the 2026–27 resident rates, less the low income tax offset and the small business income tax offset, plus the Medicare levy.
- Tax on your business = that total less the tax on your other income alone.
Tax by business profit, no other income (2026–27)
| Profit | Small business offset | Tax and Medicare | Set aside | Profit after tax |
|---|---|---|---|---|
| $20,000 | $43.20 | $0.00 | 0.0% | $20,000.00 |
| $40,000 | $523.20 | $2,971.80 | 7.4% | $37,028.20 |
| $60,000 | $1,000.00 | $8,620.00 | 14.4% | $51,380.00 |
| $80,000 | $1,000.00 | $15,120.00 | 18.9% | $64,880.00 |
| $100,000 | $1,000.00 | $21,520.00 | 21.5% | $78,480.00 |
| $150,000 | $1,000.00 | $38,570.00 | 25.7% | $111,430.00 |
| $200,000 | $1,000.00 | $58,870.00 | 29.4% | $141,130.00 |
Australian resident, no HECS-HELP debt, no Medicare levy surcharge. Not included: PAYG instalments, super contributions and personal services income rules.
Common questions
How much tax does a sole trader pay?
The same individual rates as an employee, on profit rather than income. With no other income, about $5,387 on a $50,000 profit and $21,520 on $100,000 in 2026–27, after the small business income tax offset and including the Medicare levy.
How much should I put aside for tax on ABN income?
Use the 'set aside' figure: the extra tax your profit adds to the tax on your other income, as a share of the profit. If you also have a job, the percentage is usually higher because your profit is taxed at your top rate.
What is the small business income tax offset?
A tax offset of 16% of the income tax on your net small business income, worked out as 16% × (net small business income ÷ taxable income) × your basic income tax liability, capped at $1,000. The ATO works it out from your tax return.
Do sole traders pay super?
You don't have to pay super for yourself, but you can make personal contributions and may be able to claim a deduction for them.
See also the GST calculator, the income tax calculator and the fuel tax credit calculator.
Sources: ATO small business income tax offset, registering for GST and resident tax rates. Checked 22 October 2026. General information, not tax advice.