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Find out exactly how much tax you pay on a bonus or commission payment. See the marginal tax rate applied to your lump sum and your actual take-home bonus.
Bonus tax in Australia is calculated by applying your marginal tax rate to the bonus amount, because the ATO treats the bonus as income earned on top of your regular salary.
The Australian Tax Office uses a specific method under "Schedule 5" to determine the correct withholding. Your employer calculates two figures: the annual tax on your base salary alone, and the annual tax on your base salary plus the bonus. The difference between those two figures is the tax withheld from your bonus.
An employee earns a base salary of $90,000 and receives a $10,000 performance bonus. The bonus tax calculation follows 4 steps:
This method mirrors how Australian tax calculators and payroll systems determine bonus withholding. Use our Income Tax Calculator to verify your base salary tax figures independently.
Bonuses are taxed at your marginal tax rate plus the 2% Medicare levy, not a flat "bonus tax rate." The marginal rate depends on which income tax bracket your combined salary and bonus falls into for FY2025-26.
Australia does not have a separate bonus tax rate. The ATO's Schedule 5 withholding method applies the standard individual income tax brackets to calculate the tax on supplementary payments including bonuses, commissions, and back payments.
| Taxable Income | Marginal Rate | + Medicare (2%) | Total on Bonus |
|---|---|---|---|
| $0 – $18,200 | 0% | 2% | 2% |
| $18,201 – $45,000 | 16% | 2% | 18% |
| $45,001 – $135,000 | 30% | 2% | 32% |
| $135,001 – $190,000 | 37% | 2% | 39% |
| $190,001+ | 45% | 2% | 47% |
A bonus that pushes your total income from one bracket into the next is split: the portion within the lower bracket is taxed at the lower rate, and the portion in the higher bracket is taxed at the higher rate. Use the Take-Home Pay Calculator to model different salary-plus-bonus scenarios.
Australian employees, payroll managers, and financial planners use this calculator to determine the after-tax value of lump-sum payments before they are paid or received.
Bonus tax is calculated at the marginal rate, while regular salary tax uses a blended effective rate across all brackets. This is why a bonus feels more heavily taxed than ordinary income.
| Factor | Regular Salary | Bonus / Commission |
|---|---|---|
| Tax rate applied | Blended effective rate across all brackets | Marginal rate on the top dollar of income |
| Effective rate at $90K salary | 21.8% (including Medicare) | 32% (30% + 2% Medicare) |
| Tax-free threshold benefit | Yes — first $18,200 is tax-free | No — already consumed by base salary |
| LITO offset | Applied — up to $700 reduction | Usually nil for incomes above $66,667 |
| Withholding method | ATO Schedule 1 (regular pay cycles) | ATO Schedule 5 (supplementary payments) |
| Super guarantee (12%) | Applies to OTE salary | Applies if bonus is OTE |
The effective tax rate on a $10,000 bonus for an employee on $90,000 base salary is 32%, compared to an overall effective rate of approximately 21.8% on their regular salary. The difference arises because the $18,200 tax-free threshold and lower brackets are already used by the base salary. Use the Salary Sacrifice Calculator to explore whether pre-tax contributions reduce your bonus tax impact.
The tax on a bonus ranges from 18% to 47% depending on your combined salary and bonus total. The table below shows worked examples across 5 salary levels for FY2025-26.
| Salary | Bonus | Marginal Rate | Tax on Bonus | Net Bonus |
|---|---|---|---|---|
| $60,000 | $5,000 | 32% | -$1,675 | $3,325 |
| $80,000 | $10,000 | 32% | -$3,200 | $6,800 |
| $100,000 | $15,000 | 32% | -$4,800 | $10,200 |
| $120,000 | $20,000 | 39% | -$6,750 | $13,250 |
| $150,000 | $25,000 | 39% | -$9,750 | $15,250 |
The Stage 3 tax cuts that took effect on 1 July 2024 reduced the marginal rate for the $45,001–$135,000 bracket from 32.5% to 30%, directly lowering the tax withheld from bonuses for most Australian workers.
An employee on $90,000 receiving a $10,000 bonus now pays $3,200 in tax on the bonus (32%), compared to $3,450 (34.5%) under the previous rates — a saving of $250. Check the full impact on your salary using our Take-Home Pay Calculator.
The most common mistake is assuming bonuses are taxed at a flat "bonus rate" — they are taxed at your marginal rate, which depends on your total assessable income.
From a tax perspective, no. The ATO treats bonuses, commissions, and similar one-off payments identically. They are all supplementary payments taxed under Schedule 5. Whether your payment is called a "performance bonus," "sales commission," or "incentive payment," the withholding method and tax calculation are the same.
The only practical difference is frequency: commissions are often paid monthly or quarterly, while bonuses tend to be annual or one-off. Frequent commission payments can trigger PAYG instalment obligations if your total income exceeds ATO thresholds. Track your annual earnings using the Annual Pay Calculator.
Bonus tax is one component of your total tax position for the 2025-26 financial year. These Australian tax calculators address the broader picture:
This calculator estimates tax on bonuses using the following method:
Last verified: 14 March 2026. Our content is based on the latest information from official Australian government sources.