Bonus Tax Calculator
Calculate the actual tax impact of a bonus payment. See what you'll keep, what your employer withholds, and how HECS and MLS affect your bonus — for FY 2025-26 and FY 2024-25.
Your Salary & Bonus
Your $10,000 bonus will be taxed at an effective rate of
32.0%
You keep $6,800 after tax ($567/month)
You are in the $45,001–$135,000 bracket (30%)
Bonus Take-Home
$6,800
of $10,000 bonus
Tax on Bonus
$3,200
additional tax from bonus
Effective Bonus Rate
32.0%
Marginal Rate
30.0%
Employer Withholding
$3,200
at 32.0%
Tax-Time Adjustment
+$0
refund expected
Why Your Bonus Payslip Looks Different
Your employer will likely withhold $3,200 (32.0%) from your $10,000 bonus. However, the actual tax on the bonus is only $3,200 (32.0%). You may owe an additional $0 when you lodge your tax return.
Before vs After Bonus Comparison
| Component | Without Bonus | With Bonus | Difference |
|---|---|---|---|
| Gross Salary | $85,000 | $95,000 | +$10,000 |
| Taxable Income | $85,000 | $95,000 | +$10,000 |
| Income Tax | -$16,288 | -$19,288 | -$3,000 |
| Medicare Levy | -$1,700 | -$1,900 | -$200 |
| Total Tax | -$17,988 | -$21,188 | -$3,200 |
| Net Take-Home Pay | $67,012 | $73,812 | +$6,800 |
| Effective Rate | 21.2% | 22.3% | +1.1% |
Bonus Tax in Australia: What You Actually Keep
How it works
In Australia, bonuses are taxed as ordinary income — there's no separate "bonus tax rate." When you receive a bonus, it's added to your base salary and the combined total is taxed through Australia's progressive bracket system.
The confusion arises because of withholding. Your employer uses the ATO's Schedule 5 (or marginal rate method) to calculate how much tax to withhold from a lump-sum bonus. This typically means withholding at your marginal rate (the rate on your highest dollar), which is almost always higher than the actual effective rate on the bonus.
This calculator works by running two full tax calculations — one on your base salary alone and one on your base salary plus bonus — then comparing the results. The difference in total tax between the two scenarios is the true tax cost of your bonus. This approach correctly captures bracket changes, LITO phase-outs, Medicare levy shade-in, HECS bracket jumps, and MLS threshold crossings that a simple marginal rate calculation would miss.
When to use this calculator
- You've just been told you're getting a bonus and want to know what you'll actually take home
- Your payslip shows a large tax deduction on a bonus payment and you want to understand why
- You want to estimate your tax refund from bonus over-withholding
- You have a HECS/HELP debt and want to see if the bonus pushes you into a higher repayment bracket
- You're close to an MLS threshold and want to check if the bonus triggers the surcharge
- You're comparing a bonus offer to a salary increase and want to see the after-tax difference
- You're a manager or HR professional helping employees understand their bonus payments
Key concepts
- Marginal rate vs effective rate on a bonus
- Your marginal rate is the tax on your last dollar of income. Your effective bonus rate is the total extra tax caused by the bonus divided by the bonus amount. The effective rate is usually lower than the marginal rate because only part of the bonus may fall in the higher bracket. For example, if your base salary is $90,000 and you get a $20,000 bonus, only $10,000 of the bonus falls above the $135,000 bracket change — so the effective rate on the full $20,000 bonus is a blend of 30% and 37%.
- Employer withholding on bonuses
- Under ATO withholding rules, employers withhold tax from bonuses at the marginal rate applicable to your combined income. This means the tax taken from your bonus payslip is typically higher than the actual tax you owe on the bonus. The difference is returned to you as part of your tax refund when you lodge your return. This calculator shows both amounts so you know what to expect.
- HECS bracket jumps from bonuses
- HECS/HELP repayments are calculated on your total repayment income, which includes bonuses. Because HECS uses stepped rates applied to your entire income (not just the amount above each threshold), a bonus that pushes you into a higher HECS bracket increases your repayment on all your income — not just the bonus. This can make the effective HECS cost of a bonus disproportionately large.
- MLS threshold crossing
- If you don't have private health insurance and your base salary is near the Medicare Levy Surcharge threshold ($93,000 for singles), a bonus can push you above it. The MLS (1%–1.5%) then applies to your entire taxable income, not just the amount above the threshold. In these cases, taking out basic hospital cover before the end of the financial year can actually save you money.
- Bonus vs pay rise — the tax truth
- A $10,000 bonus and a $10,000 pay rise produce the exact same tax outcome over a financial year. The only difference is cash flow timing: a pay rise spreads the income (and tax) evenly across pay periods, while a bonus concentrates it in one payment with higher upfront withholding. At tax time, both result in the same total tax. The real advantage of a pay rise is that it compounds in future years, while a bonus is typically one-off.
Worked example — "I got a $15,000 bonus on an $95,000 salary"
James earns $95,000 base salary and receives a $15,000 end-of-year bonus. He has a HECS debt and private health insurance.
Step 1 — Tax on base salary alone (FY 2025-26, resident, HECS, PHI):
| Component | Without Bonus |
|---|---|
| Gross salary | $95,000 |
| Income tax | −$20,342 |
| Medicare levy (2%) | −$1,900 |
| HECS repayment (4.5%) | −$4,275 |
| Net take-home | $68,483 |
Step 2 — Tax on base + bonus ($110,000):
| Component | With Bonus |
|---|---|
| Gross salary | $110,000 |
| Income tax | −$24,967 |
| Medicare levy (2%) | −$2,200 |
| HECS repayment (5%) | −$5,500 |
| Net take-home | $77,333 |
Step 3 — The bonus impact:
| Amount | |
|---|---|
| Bonus amount | $15,000 |
| Extra income tax | −$4,625 |
| Extra Medicare | −$300 |
| Extra HECS | −$1,225 |
| Total tax on bonus | −$6,150 |
| Bonus take-home | $8,850 |
| Effective bonus rate | 41.0% |
What this tells James:
- His $15,000 bonus is effectively taxed at 41.0% — higher than his 30% bracket rate because the bonus also increases his HECS repayment rate from 4.5% to 5%
- His employer will withhold approximately $4,800 in income tax from the bonus (at the 32% marginal+Medicare rate), but the actual income tax impact is $4,625 — he'll get about $175 back at tax time
- The HECS jump costs him an extra $1,225 — this is the hidden cost that surprises many people, because the higher HECS rate applies to his entire repayment income, not just the bonus
- If James could salary sacrifice $5,000 of the bonus into super before it's paid, he'd save the difference between his marginal rate (30%) and the super contributions tax (15%) on that amount — roughly $750 in tax savings
Bonus Tax Calculator FAQ
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