Income Tax Cuts Calculator - Australia Federal Budget 2020/21
Calculate previous tax, revised tax, offsets, savings, effective rates, and take-home income based on taxable income. Income Tax Cuts Calculator - Australia Federal Budget 2020/21 helps Australian taxpayers understand federal tax changes and potential savings.
Highlights
- Compare Australian federal income tax before and after the 2020/21 tax cuts.
- Calculate tax payable after applying LITO and LMITO offsets.
- See estimated annual, monthly, fortnightly, and weekly tax savings.
- View your effective and marginal tax rates for 2020/21.
- Estimate your 2020/21 after-tax income in AUD.
Table of Contents
How Income Tax Cuts Calculator - Australia Federal Budget 2020/21 Works?
This calculator compares estimated Australian federal income tax under the 2019/20 and 2020/21 resident tax rules. It starts with annual taxable income, calculates tax before offsets, applies the Low Income Tax Offset (LITO) and Low and Middle Income Tax Offset (LMITO), and then compares the resulting tax payable.
For each financial year, tax is calculated progressively. This means each portion of taxable income is taxed at the rate applying to its bracket rather than taxing the entire income at the highest rate reached.
| Financial year | Taxable income range | Calculation |
|---|---|---|
| 2019/20 | $0–$18,200 | Nil |
| 2019/20 | $18,201–$37,000 | 19% of income above $18,200 |
| 2019/20 | $37,001–$90,000 | $3,572 + 32.5% of income above $37,000 |
| 2019/20 | $90,001–$180,000 | $20,797 + 37% of income above $90,000 |
| 2019/20 | Above $180,000 | $54,097 + 45% of income above $180,000 |
| 2020/21 | $0–$18,200 | Nil |
| 2020/21 | $18,201–$45,000 | 19% of income above $18,200 |
| 2020/21 | $45,001–$120,000 | $5,092 + 32.5% of income above $45,000 |
| 2020/21 | $120,001–$180,000 | $29,467 + 37% of income above $120,000 |
| 2020/21 | Above $180,000 | $51,667 + 45% of income above $180,000 |
The calculator then subtracts the applicable offsets. For 2019/20, LITO is generally $445 for income up to $37,000, phases down between $37,000 and $66,667, and reaches zero above that level. For 2020/21, the maximum LITO increases to $700 and phases down over the relevant income ranges. LMITO is calculated using the legislated 2019/20 and 2020/21 rates: it increases to a maximum of $1,080 for eligible middle-income taxpayers and phases out at higher incomes.
The annual tax saving is the difference between the estimated 2019/20 tax payable and the estimated 2020/21 tax payable. The calculator also presents budgeting estimates by dividing this annual saving by 12 for a monthly figure, 26 for a fortnightly figure, and 52 for a weekly figure.
The 2020/21 effective tax rate is the estimated tax payable after offsets divided by taxable income. The marginal tax rate is the statutory rate applying to the highest bracket reached by the taxable income.
After-tax income is calculated by subtracting 2020/21 federal tax payable from taxable income. The result excludes Medicare levy, Medicare levy surcharge, HELP or other student loan repayments, rebates not represented by the calculator, and personal deductions or circumstances not entered into the calculation.
Practical Use Cases
Employees can compare estimated federal tax payable before and after the 2020/21 changes and use the weekly, fortnightly, or monthly saving estimates when reviewing their household budget.
Salary negotiators can estimate how a proposed annual taxable income may affect after-tax income, effective tax rate, and the tax benefit associated with the budget changes.
Household budget planners can use the annual tax saving and after-tax income figures to assess available cash flow for regular expenses, savings, or debt repayments.
Freelancers and sole traders can obtain a preliminary estimate of federal income tax based on taxable income before completing a more detailed calculation that includes business deductions and other tax obligations.
Students and tax learners can see how progressive brackets, LITO, and LMITO interact and why the marginal tax rate is not the same as the effective tax rate.
Financial advisers and payroll reviewers can use the calculator as a quick comparison tool for discussing the federal tax-rate changes, while confirming final figures against complete client information and current tax guidance.
Accuracy and Limitations
The calculator applies the supplied Australian resident income-tax brackets and LITO and LMITO rules for 2019/20 and 2020/21 to the entered annual taxable income, with tax payable prevented from falling below zero after offsets. It is an estimate of federal income tax only: it does not include the Medicare levy, Medicare levy surcharge, HELP or other study-loan repayments, tax deductions, salary-sacrifice arrangements, special rebates, foreign income, non-resident rules, or individual eligibility conditions for offsets. The weekly, fortnightly, and monthly results are simple allocations of the annual difference and may not match an employer's exact withholding or payroll amount.
Quick Examples
Example #1: Entry-Level Income
Estimate federal tax changes and potential savings for an Australian taxpayer with a lower annual taxable income.
Example #2: Middle-Income Earner
Compare estimated 2019/20 and 2020/21 federal income tax outcomes for a typical middle-income taxpayer.
Example #3: High-Income Earner
Evaluate the estimated tax payable, effective tax rate, and savings for a higher-income Australian taxpayer.
