Published: August 2025
Navigating Australian tax tables doesn't have to be a headache. Understanding the right PAYG withholding amounts is crucial for keeping your business compliant and your employees happy. With the Stage 3 tax cuts continuing into 2025-26, getting these calculations right remains important for your payroll accuracy.
The ATO provides tax tables for different pay frequencies - weekly, fortnightly, or monthly - to guide employers in calculating the correct PAYG withholding amounts. These tables are your roadmap to ensuring employees don't face unexpected tax bills at year-end whilst keeping your business on the right side of compliance.
Think of tax tables as your payroll GPS - they guide you to the exact withholding amount based on your employee's earnings and pay frequency. Without them, you're essentially driving blind through Australia's complex tax landscape.
The 2025-26 financial year maintains the same tax structure as the previous year, with no changes to income tax brackets or rates. This provides welcome stability for small business payroll planning.
You can find the current tax rates and thresholds on the ATO website at their individual income tax rates page.
While 2025-26 maintains current rates, the government has announced further tax cuts for future years. From 1 July 2026, the 16% tax rate will reduce to 15%, and from 1 July 2027, it will drop to 14%. This means additional tax relief of $268 in 2026-27 and $536 per year from 2027-28 for workers earning more than $45,000.
Most Australian small businesses run weekly payrolls, making the weekly tax table your go-to resource. You can access the current weekly tax table on the ATO website at their weekly tax table page.
Employee earning $1,200 per week ($62,400 annually):
The beauty of weekly calculations lies in their simplicity. Smaller numbers are easier to verify and explain to employees.
Fortnightly pay cycles strike the perfect balance between administrative efficiency and employee cash flow. You can find the current fortnightly tax table on the ATO website at their fortnightly tax table page.
Employee earning $2,400 per fortnight ($62,400 annually):
Many businesses find fortnightly payrolls reduce administrative burden whilst maintaining regular employee income flow.
Monthly payrolls work well for salaried employees and can significantly reduce processing time. You can access the current monthly tax table on the ATO website at their monthly tax table page.
Employee earning $5,200 per month ($62,400 annually):
On the ATO website, they also have an online tax withheld calculator that calculates the correct amount of tax to withhold. Try this today!
You must withhold 47% from any payment you make to a resident employee and 45% from a foreign resident employee when employees haven't provided proper TFN declarations. This significant withholding rate protects both you and the employee from potential compliance issues.
Employees with Higher Education Contribution Scheme (HECS) or Help debts require additional withholding beyond standard tax amounts. The current HELP repayment threshold is $51,550 annually, with rates ranging from 1% to 10% depending on income levels.
Some employees may request additional tax withholding to avoid year-end bills. This voluntary arrangement requires proper documentation and consistent application throughout the year.
Modern payroll software has revolutionised tax table management. Quality systems automatically:
The initial software investment typically pays for itself within months through reduced processing time and error elimination.
Tax tables change annually, sometimes mid-year. Using last year's tables can result in significant under or over-withholding.
Using weekly tables for fortnightly employees (or vice versa) creates substantial calculation errors.
Only one employer should apply the tax-free threshold per employee. Multiple threshold claims result in under-withholding.
Human error in manual calculations is inevitable. Even small mistakes compound over time.
Single Touch Payroll became mandatory for ALL employers on 1 July 2021. This means your tax table calculations feed directly into ATO systems with each pay run. Accuracy isn't just about compliance for your Aussue business, it's about real-time reporting to government agencies.
Your payroll data now flows seamlessly from calculation to ATO reporting, making precision more critical than ever.
Maintaining accurate tax withholding records isn't optional. It's a legal requirement. Essential documentation includes:
These records must be retained for five years and made available for ATO audits upon request.
Smart businesses prepare for tax year changes well in advance. Key transition activities include:
This proactive approach prevents compliance issues and maintains employee confidence in your payroll accuracy.
Clear communication about tax withholding builds trust and reduces queries. Consider providing employees with:
Educated employees make better financial decisions and require less support from your team.
Q: How often do Australian tax tables change?
A: Tax tables typically update annually on 1 July, coinciding with the new financial year. However, mid-year changes can occur due to government policy adjustments, as seen with the Stage 3 tax cuts implementation.
Q: Can I use weekly tax tables for fortnightly pay runs?
A: No, you must use the tax table that matches your pay frequency. Using weekly tables for fortnightly pay will result in incorrect withholding amounts and potential compliance issues.
Q: What happens if an employee doesn't provide a TFN declaration?
A: You must withhold tax at the highest rate - 47% for Australian residents and 45% for foreign residents. This continues until the employee provides a valid TFN declaration.
Q: Do I need different tax tables for casual employees?
A: No, the same tax tables apply regardless of employment type. However, ensure casual employees complete proper TFN declarations and understand their tax obligations.
Q: How do I handle employees with multiple jobs?
A: Only one employer should apply the tax-free threshold. Secondary employers typically withhold tax from the first dollar earned. Employees declare this on their TFN declaration.
Q: What's the penalty for incorrect tax withholding?
A: Penalties vary depending on the error's nature and extent. Minor administrative errors may incur warnings, whilst systematic non-compliance can result in significant financial penalties and legal action.
Q: Should small businesses use payroll software or manual calculations?
A: Payroll software significantly reduces errors and ensures automatic compliance with changing tax tables. For businesses with multiple employees, software typically pays for itself through time savings and accuracy improvements.
Q: How do Stage 3 tax cuts affect my payroll calculations in 2025-26?
A: The Stage 3 tax cuts continue to apply in 2025-26 with no changes from the previous year. Your payroll system should maintain the same withholding calculations as 2024-25, providing stability and consistency.
Q: Can employees request additional tax withholding?
A: Yes, employees can request additional withholding to avoid year-end tax bills. Document these requests properly and apply them consistently throughout the year.
Q: What records must I keep for tax withholding?
A: Maintain employee TFN declarations, pay records, withholding calculations, and any variation approvals for five years. These must be available for ATO audits upon request.
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