A refund is not a windfall. It is the difference between what your employer withheld from your pay across the year and what you actually owed once the year was over. A big refund means you lent the ATO money interest free for twelve months. A bill means the opposite.
Either way it is worth knowing the number before you lodge, because one of them changes what you do next. Returns for the 2025-26 year are due 31 October 2026 if you lodge yourself.
The estimator below runs the 2025-26 rates in your browser. Underneath it is the arithmetic it uses, so you can check it by hand or see exactly which part of your own situation it is not modelling.
The Estimator
Estimate your 2025-26 refund
For a single resident with no dependants. Figures update as you type. Nothing is sent anywhere, it all runs in your browser.
Before tax, from your income statement in myGov.
Work-related expenses you can substantiate.
Tax already paid on your behalf during the year.
- Taxable income
- $89,600
- Income tax
- $17,668
- Medicare levy
- $1,792
- Total you owe for the year
- $19,460
Estimated refund
$3,040
An estimate, not a calculation of your assessment. It does not model a spouse or dependants, SAPTO, the private health insurance rebate, franking credits, capital gains, foreign income, or the broader income figures the surcharge and study loan repayment are really assessed on. Those are the usual reasons a real assessment lands somewhere else.
The 2025-26 Rates
These are the resident rates for the year ending 30 June 2026. They are unchanged from 2024-25.
| Taxable income | Tax on this income |
|---|---|
| $0 to $18,200 | Nil |
| $18,201 to $45,000 | 16c for each $1 over $18,200 |
| $45,001 to $135,000 | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 to $190,000 | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 |
The rate in each row applies only to the income inside that band, which is why a pay rise that pushes you into a higher bracket never leaves you worse off. Only the dollars above the threshold are taxed at the higher rate.
Worth knowing for next year rather than this one: from 1 July 2026 the 16% rate drops to 15%. That affects the 2026-27 return you will lodge in the second half of 2027, not the one due this October.
The Order the Arithmetic Runs In
Most of the confusion about refunds comes from doing these steps in the wrong order, or from assuming a deduction is worth its face value. It is not.
- Taxable income is assessable income minus deductions.
- Income tax comes off the table above, applied to taxable income.
- Offsets reduce the tax, not the income. The low income tax offset is worth up to $700, and it phases out entirely by $66,667. Offsets are non-refundable, so they can take your tax to zero but never below it.
- The Medicare levy is added, at 2% of taxable income. Offsets do not reduce it.
- The Medicare levy surcharge is added if your income is above $101,000 as a single and you did not hold private hospital cover.
- Any compulsory study loan repayment is added.
- Tax withheld is subtracted from the total. What is left is your refund, or your bill.
Step three is the one that surprises people. A $1,000 deduction does not put $1,000 in your pocket. It reduces your taxable income by $1,000, which is worth $1,000 times your marginal rate. On the 30% rate that is $300, or $320 once you count the Medicare levy you also avoid. Anyone telling you to spend money purely for the deduction is telling you to spend a dollar to save thirty cents.
A Worked Example
Take someone who earned $100,000, has $3,500 of substantiated work-related deductions, held private hospital cover all year, has no study loan, and had $26,238 withheld.
- Taxable income: $100,000 less $3,500 = $96,500.
- Income tax: $4,288 plus 30% of ($96,500 less $45,000) = $4,288 plus $15,450 = $19,738.
- Low income tax offset: nil, because $96,500 is well past $66,667.
- Medicare levy: 2% of $96,500 = $1,930.
- Total owed for the year: $21,668.
- Less tax withheld of $26,238, giving a refund of $4,570.
Notice what the $3,500 of deductions was actually worth. Without them, taxable income would have been $100,000, tax $20,788 and the levy $2,000, for a total of $22,788. So the deductions saved $1,120, which is 32% of $3,500: the 30% marginal rate plus the 2% levy. Not $3,500.
What Changed for Study Loans
If you have a HECS-HELP, VET Student Loan, SFSS or similar debt, 2025-26 is the first year the compulsory repayment is worked out marginally. This is a real change and it is the single most common reason a refund is bigger this year than last.
Until 2024-25, crossing the threshold meant paying a percentage of your entire repayment income. Earning one dollar over could cost you hundreds. From 2025-26 you pay only on the income above each threshold, the same way income tax works.
| Repayment income | Compulsory repayment |
|---|---|
| $0 to $67,000 | Nil |
| $67,001 to $125,000 | 15c for each $1 over $67,000 |
| $125,001 to $179,285 | $8,700 plus 17c for each $1 over $125,000 |
| $179,286 and over | 10% of total repayment income |
The threshold also jumped, from $54,435 in 2024-25 to $67,000. Someone on $70,000 who repaid around $1,800 last year repays $450 this year. If your employer kept withholding at the old rate all year, that difference lands in your refund.
One catch the estimator flags but cannot fix: repayment income is not taxable income. It adds back reportable fringe benefits, reportable employer super contributions, net investment losses and exempt foreign income. Salary sacrificing into super lowers your taxable income but not your repayment income, which is exactly the trap people fall into when they sacrifice to duck a study loan repayment.
Where the Numbers Come From
Three figures do almost all the work, and two of them you should not be guessing at.
- Gross income and tax withheld both come from your income statement, which your employer finalises in myGov rather than handing you a payment summary. Use the finalised statement, not your last payslip. The payslip will not include any adjustment made at finalisation, and if the statement is still marked "not tax ready" the figures can still move.
- Deductions come from your own records. The rule is unglamorous: you needed to spend the money yourself, it has to relate to earning your income, you must not have been reimbursed, and you need a record. If you work from home, the fixed rate method now requires a record of the actual hours worked from home across the whole year, not a four week sample. We covered what that means in practice in our guide to home office deductions.
- Everything else, including bank interest, dividends, rental income, capital gains and government payments, is income too. Most of it is prefilled by late July or August. Lodging before the prefill has landed is one of the most reliable ways to end up with an amended assessment and a bill.
If you run a business rather than drawing a wage, there is no income statement and the arithmetic starts with your own books. Sole traders should read our guide to sole trader deductions, which covers what is claimable and the records that have to sit behind it.
Why the Real Assessment Differs
Every estimator, including this one and the ATO's, works from a handful of inputs. Your assessment works from everything the ATO knows. The gaps are predictable.
- A spouse changes the thresholds. Family Medicare levy and surcharge thresholds are assessed on combined income and the number of dependent children. The estimator above assumes a single person with no dependants.
- Offsets you did not account for. The seniors and pensioners offset, the invalid carer offset and the zone offsets can all move the result materially.
- Franking credits are refundable. Unlike most offsets they can push you past zero into an actual refund, which is why share investors often get back more than they expect.
- The private health insurance rebate is reconciled at lodgement. If you claimed it as a reduced premium during the year and your income turned out higher than you nominated, part of it is clawed back here.
- A capital gain. Selling shares or a property adds the net gain to your taxable income, usually with no tax withheld against it, which is a common route to an unexpected bill.
- Debts the ATO offsets against your refund. An outstanding tax debt, or a Centrelink or child support debt, is deducted before the money reaches you.
If the Answer Is a Bill
A bill is not a reason to delay lodging. Lodging and paying are separate obligations with separate consequences, and the penalties attach to the lodgement.
The failure to lodge penalty runs at one penalty unit for each 28 days a return is late, to a maximum of five units. A penalty unit has been $364 since 1 July 2026, so a return that is five months late costs $1,820 before any interest on the debt itself. Lodging on time with a debt you cannot immediately pay avoids all of that, and the ATO will generally accept a payment plan.
The other reason to lodge early when you expect a bill: the amount is due on 21 November for a self-lodged return, regardless of whether you lodged in July or on the deadline. Knowing in July gives you four months to find the money. Knowing on 31 October gives you three weeks.
Lodging through a registered tax agent generally gives you until 15 May 2027 instead of 31 October, but you have to be on that agent's client list before 31 October for the deferral to apply. It is not something you can arrange in November.
Frequently Asked Questions
Why is my refund smaller than last year?
The rates did not change between 2024-25 and 2025-26, so the usual causes are a pay rise partway through the year, a second job where the tax-free threshold was claimed twice, a bonus taxed at a flat withholding rate, or income the ATO prefilled that you had not counted. A study loan is more likely to have pushed your refund up this year, not down.
Does a bigger refund mean I did something right?
No. It means more was withheld than needed to be. That is not a saving, it is money you could have had in your account each fortnight. A refund near zero means your withholding was accurate, which is the ideal outcome.
When does the money actually arrive?
Most electronically lodged returns are processed within two weeks. It takes longer if the ATO is checking something, if you have an outstanding debt, or if your bank details on file are wrong.
Can I claim a deduction without a receipt?
There is a limited concession for total work-related expense claims of $300 or less, where you do not need written evidence but must still have spent the money and be able to explain how you worked out the claim. It is not a $300 allowance you can claim without spending anything, and car, travel and meal claims have their own substantiation rules regardless.
Is the estimator above the same as the ATO's calculator?
It uses the same 2025-26 rates and thresholds, but it models fewer things. It assumes a single resident with no dependants and treats taxable income as a proxy for the broader income figures the surcharge and study loan repayment are really assessed on. For most salaried people with hospital cover and no investments it lands close. For anyone with a spouse, a capital gain or franking credits it will not.
The point of knowing the number in advance is not the number. It is that a refund you were expecting can be committed to something useful, and a bill you were not expecting is only a problem when you find out about it three weeks before it is due.
Trew North Accounting has been preparing individual and business returns from Beaumaris for 40 years. If your return has moving parts the estimator above cannot see, see our personal tax services, our guide to the lodgement deadlines, or get in touch before 31 October.
This article is general information, not advice for your circumstances. Rates, thresholds and due dates change. Check current figures with the ATO, or with us, before you rely on them.