Bonus Tax Calculator Australia

How Is Bonus Tax Calculated in Australia?

Tax on a bonus in Australia is the difference between the annual tax on salary alone and the annual tax on salary plus bonus, worked out on the 2026-27 scale; there is no flat bonus tax. For an employee on $90,000 receiving $10,000, that difference is $3,200, so $6,800 of the bonus is kept. Employers withhold from bonus payments using ATO Schedule 5, and any over-withholding is refunded at tax time.

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.

This calculator works out the extra tax you'll actually owe on your bonus for the year. It compares 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 the bonus adds to your annual bill, which is the part of the bonus you don't keep.

Step-by-Step Worked Example

An employee earns a base salary of $90,000 and receives a $10,000 performance bonus. The bonus tax calculation follows 4 steps:

1. Calculate tax on base salary ($90,000): Income tax is $17,520 (using FY2026-27 brackets). Add the 2% Medicare levy of $1,800. LITO is nil at this income. Total deductions on base salary: $19,320.
2. Calculate tax on combined income ($100,000): Income tax is $20,520. Medicare levy is $2,000. Total deductions on combined income: $22,520.
3. Find the difference: $22,520 − $19,320 = $3,200 in tax attributable to the bonus.
4. Calculate take-home bonus: $10,000 − $3,200 = $6,800 net bonus. The effective tax rate on the bonus is 32% (30% marginal rate + 2% Medicare levy).

This is the same annualised logic the tax system settles on when you lodge your return. Use our Income Tax Calculator to verify your base salary tax figures independently.

Bonus Tax vs Employer Withholding — What's the Difference?

There are two different numbers people call "tax on my bonus", and they rarely match to the dollar. This page calculates the first one: the extra tax you'll actually owe on your bonus for the year, which is the amount the bonus adds to your annual tax liability.

The second number is what your employer takes out of the bonus paycheque itself. That is PAYG withholding, calculated under the ATO's Schedule 5 tax table for back payments, commissions and bonuses. Schedule 5 works from your regular pay-period withholding amounts rather than your finished annual return, so the amount withheld from the bonus paycheque can be more or less than the tax the bonus ultimately adds to your year.

Any gap is settled when you lodge your tax return: if your employer withheld more than the bonus's real tax cost, the difference comes back as part of your refund; if less, it reduces your refund or adds to a bill. For the withholding side (what will actually be taken out of the bonus paycheque), see our Schedule 5 tax table guide.

What Tax Rate Applies to Bonuses in Australia?

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 FY2026-27.

Australia does not have a separate bonus tax rate. A bonus is added to your taxable income for the year and taxed under the standard individual income tax brackets, so the extra tax you owe depends on the bracket your combined salary and bonus reaches.

FY2026-27 Tax Brackets Applied to Bonuses

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.

Who Uses This Bonus Tax Calculator?

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.

• Full-time and part-time employees receiving annual performance bonuses, Christmas bonuses, or retention payments who want to know their take-home pay after tax
• Sales professionals earning regular commissions who need to forecast their net income across the financial year
• Small business owners and payroll officers cross-checking that the PAYG amount withheld under ATO Schedule 5 lines up with the tax a bonus actually adds to an employee's year
• Contractors transitioning to employment comparing the tax treatment of lump-sum payments versus regular salary (our Contractor vs Employee Calculator provides a full side-by-side comparison)
• Job seekers evaluating compensation packages that include sign-on bonuses or guaranteed incentive payments

How Does Bonus Tax Compare to Regular Income Tax?

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.

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 21.5% 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.

How Much Tax Do You Pay on Common Bonus Amounts?

The tax on a bonus ranges from 17% to 47% depending on your combined salary and bonus total. The table below shows worked examples across 5 salary levels for FY2026-27.

How Much Tax Will I Pay on a $5,000 Bonus?

A $5,000 bonus usually costs between $1,250 and $2,350 in tax for FY2026-27, depending on your salary. It is taxed at your marginal rate plus the 2% Medicare levy, so a salary in a higher tax bracket leaves less of the bonus in your pocket.

Resident rates, no HECS-HELP debt, full year of salary. Your employer may withhold a slightly different amount from the bonus pay; the difference is settled when you lodge your return.

What Changed for Bonus Tax in FY2026-27?

From 1 July 2026, the marginal rate for the $18,201–$45,000 bracket fell from 16% to 15%. This is the first bracket change since the Stage 3 cuts of July 2024, which had already lowered the middle bracket from 32.5% to 30%.

• The 15% rate now applies from $18,201 to $45,000 (16% in FY2025-26), so a bonus landing in that bracket is taxed at 17% including Medicare, down from 18%
• The brackets above $45,000 are unchanged — 30% to $135,000, 37% to $190,000, then 45% — so a bonus taxed in those brackets attracts the same marginal rate as it did last financial year
• Everyone earning $45,000 or more still pays $268 less tax across the year from the rate cut
• Payday Super commenced on 1 July 2026: if your bonus attracts the 12% superannuation guarantee, the contribution now reaches your fund within days of the payment instead of up to a quarter later

An employee on $90,000 receiving a $10,000 bonus pays $3,200 in tax on the bonus (32%), the same as in FY2025-26, because both figures sit in the unchanged 30% bracket. Their saving shows up in the annual tax bill instead. Check the full impact on your salary using our Take-Home Pay Calculator.

The next change is already legislated: from 1 July 2027 the 15% rate falls to 14% and a new Working Australians Tax Offset of up to $250 starts, so a bonus paid after that date in the second bracket is taxed a point lower again. Every dated change to pay and tax rules, including the 1 December 2026 junior rate step, is on the pay and tax changes calendar. Your employer still works out the regular part of the pay from the ATO table for the pay date: the weekly, fortnightly or monthly tax table for 2026-27, before the Schedule 5 amount for the bonus is added.

Which Jobs Commonly Pay a Bonus?

Performance and incentive pay is most common in professions with no modern award, where the National Minimum Wage is the only legal floor and the whole package is set by contract. The salary each page leads with is the median people in the job reported to the ATO, before any bonus:

• Software Engineer pay: $33.71/hr award minimum
• Project Manager pay: $120,744 median salary
• Mortgage Broker pay: $81,587 median salary
• Business Analyst pay: $119,229 median salary
• Data Analyst pay: $89,634 median salary
• Cyber Security Professional pay: $33.71/hr award minimum
• Actuary pay: $166,678 median salary

Commission-paid roles are taxed the same way: see mortgage broker pay and the Commercial Sales Award, the award for commission-paid sales reps and merchandisers.

What Are Common Bonus Tax Mistakes?

The most common mistake is assuming bonuses are taxed at a flat "bonus rate". Bonuses are taxed at your marginal rate, which depends on your total assessable income.

1. Confusing marginal rate with effective rate: Employees see a bonus taxed at 32% and believe their entire salary is taxed at that rate. The effective rate on a $90,000 salary is approximately 21.5%. The bonus is taxed at the marginal rate because it sits on top of existing income.
2. Forgetting the Medicare levy: The 2% Medicare levy applies to bonuses on top of the income tax rate. A 30% marginal bracket results in 32% total tax on the bonus, not 30%.
3. Ignoring bracket crossover: A $5,000 bonus on a $133,000 salary pushes total income from the 30% bracket into the 37% bracket. The first $2,000 of the bonus is taxed at 32% and the remaining $3,000 at 39%.
4. Not accounting for HECS-HELP: Employees with a HELP debt owe a larger compulsory repayment when a bonus lifts their repayment income. A bonus that pushes total income above the $69,528 HECS threshold triggers a repayment obligation at your return. Use the HECS-HELP Calculator to check your repayment liability.
5. Assuming super is never paid on bonuses: The 12% superannuation guarantee applies to bonuses that count as qualifying earnings, which include performance, Christmas, sign-on and referral bonuses. The only bonus excluded is one paid solely for work performed entirely outside your ordinary hours. Super guarantee is also not owed on qualifying earnings above the $270,830 annual maximum contribution base, or to an employee under 18 in a week they work 30 hours or less.

Looking for the Age Pension Work Bonus? The Work Bonus is an income-test offset for working pensioners, not a bonus payment. See the Age Pension income test calculator.

Christmas Bonus: From Your Employer or From Centrelink?

"Christmas bonus" means two different things in Australia, and only one of them is real income this page can work out.

• A Christmas bonus from your employer. A year-end or Christmas bonus paid through payroll is treated like any other bonus. The 12% super guarantee applies if it counts as qualifying earnings, and tax is withheld using the Schedule 5 method described above. Enter the amount in the calculator at the top of this page to see what lands in your account.
• A Christmas bonus from Centrelink. We found no Christmas bonus listed among Services Australia's payments. Services Australia warns that unofficial websites and social media posts promote one-off and bonus payments that don't exist, with amounts such as $750, $950, $1,800 and $4,100. If a post promises one, check Services Australia's fake information page, and don't click links or give out personal details. The only genuine Services Australia and myGov websites are servicesaustralia.gov.au and my.gov.au.

What Centrelink does change over Christmas is when payments arrive, because of public holidays. See Centrelink payment dates for the schedule, and public holiday pay if you are working over the break.

Is There a Difference Between Commission Tax and Bonus Tax?

From a tax perspective, no. The ATO treats bonuses, commissions, and similar one-off payments identically: all are added to your annual income and taxed at your marginal rate, and on the withholding side all are supplementary payments under Schedule 5. Whether your payment is called a "performance bonus", "sales commission" or "incentive payment", the tax calculation is the same.

The only practical difference is frequency: commissions are often paid monthly or quarterly, while bonuses tend to be annual or one-off. Commission paid to you as an employee has tax withheld under PAYG withholding, the same as your salary, so it is not instalment income and does not put you into PAYG instalments, which cover business and investment income. Track your annual earnings using the Annual Pay Calculator.

Paid commission rather than a bonus? The commission tax calculator shows the same two figures: the tax it adds to your year and the Schedule 5 withholding on the pay, for retainer-plus-commission, quarterly and commission-only structures.

Do You Get Tax Back on Bonuses?

You receive a tax refund on your bonus only if your employer withheld more tax than your actual liability. The Schedule 5 method minimises this gap, so most refunds on bonus withholding are small or zero.

Over-withholding happens in 3 common scenarios:

• Bonus paid early in the financial year: the employer projects a full year of income, but you change jobs or reduce hours mid-year, lowering your actual taxable income
• Employer uses flat-rate annualisation instead of Schedule 5. Some payroll systems annualise the pay period containing the bonus, producing a higher withholding rate
• Significant tax deductions: work-related expenses and other deductions you claim in your return reduce your taxable income below the income your employer's withholding was based on

When you lodge your tax return, the ATO calculates your actual tax liability on total income (salary plus bonus) and compares it to total PAYG withholding throughout the year. The difference is your refund or balance owing. See our Tax Refund Guide for a full explanation of how refunds are calculated.

How to Reduce Tax on Your Bonus

The most effective way to reduce tax on a bonus is to salary sacrifice it into superannuation, converting a marginal rate of up to 47% (including the Medicare levy) into 15% contributions tax.

Strategy 1: Salary Sacrifice Into Super

Directing part or all of a bonus into superannuation as a concessional (before-tax) contribution reduces taxable income. The arrangement must be in place before you accrue the bonus: the ATO says an effective salary sacrifice arrangement can't include bonuses you accrue before you enter it. The contribution is taxed at 15% inside the super fund, compared to 32% to 47% (marginal rate plus Medicare levy) on income over $45,000 outside super. If your income plus concessional contributions is over $250,000, Division 293 tax adds another 15% on some or all of the contributions. A worker on $120,000 who sacrifices a $10,000 bonus saves approximately $1,700 in tax ($3,200 at the marginal rate plus Medicare levy, minus $1,500 in super contributions tax).

The concessional contribution cap for FY2026-27 is $32,500 per year, including employer SG contributions of 12%. A worker earning $120,000 receives $14,400 in SG, leaving $18,100 of cap space for salary sacrifice. Workers with unused cap space from previous years (where their total super balance was below $500,000 on 30 June of the previous financial year) can carry forward up to 5 years of unused amounts. See our Salary Sacrifice Guide to compare the tax you pay with and without sacrificing part of your bonus.

Strategy 2: Time the Bonus Payment

A bonus is assessable income in the financial year it is paid, not the year it is earned. If you expect lower income next financial year (due to parental leave, career break, or part-time work), ask your employer to defer the bonus payment into the new financial year. A $10,000 bonus taxed at the 30% bracket costs $3,200 in tax and Medicare levy. The same bonus taxed at the 15% bracket (if your total income including the bonus is $45,000 or less) costs about $1,700, a saving of roughly $1,500, before any Low Income Tax Offset effect.

Strategy 3: Maximise Deductions

Work-related deductions reduce your taxable income, and a large enough deduction can pull part of your bonus down into a lower tax bracket. Common deductions that offset tax on a bonus include self-education expenses, home office costs, professional memberships, and income protection insurance premiums. Every $1,000 in deductions at the 37% marginal rate reduces your tax and Medicare levy by $390.

Is Superannuation Paid on Bonuses?

Bonuses for work performed are generally "Ordinary Time Earnings" (OTE), which makes them qualifying earnings under Payday Super, and they attract the 12% Superannuation Guarantee for FY2026-27.

Your employer pays SG at 12% on top of your bonus and deposits it into your super fund. A $10,000 performance bonus generates $1,200 in additional super contributions. The ATO's qualifying earnings table (Table 10) treats bonuses this way:

• Performance and Christmas bonuses: included, attract the full 12% SG
• Sign-on bonuses for new employees: included
• Referral bonuses: included
• Bonus solely for work performed entirely outside ordinary hours: excluded (treated as overtime)

Since Payday Super began, the maximum super contribution base has been an annual figure: $270,830 for FY2026-27. Employers are not required to pay SG on qualifying earnings above this cap. For more detail on contribution limits and rates, see our Superannuation Guide.

What Is Lump Sum E (Back Pay From Earlier Years)?

"Lump Sum E" is back pay for wages that accrued more than 12 months before you were paid. It is taxed in the year you receive it, but the ATO considers you for a tax offset, a Medicare levy exemption and a Medicare levy surcharge offset so you are not taxed more heavily just because the money arrived late.

Your employer reports it separately as Lump Sum E on your income statement. Since 1 July 2025 there is no minimum amount. When you lodge, you enter the breakdown of which years it relates to and the ATO works out the offset; the myTax estimate does not show it. Back pay for the last 12 months is part of your normal income. "Lump Sum B" is unused long service leave, not back pay.

Retrospective pay rises under enterprise agreements, back-paid award rate increases and underpayment settlements are Lump Sum E when they cover wages from those earlier years. Use the back pay calculator to estimate how much you are owed.

Which Related Calculators Help with Bonus Planning?

Bonus tax is one component of your total tax position for the 2026-27 financial year. These Australian tax calculators work out the rest of your pay, tax and super:

• Take-Home Pay Calculator — calculates your net pay after income tax, Medicare levy, HECS, and superannuation on your full salary including bonuses
• Income Tax Calculator — shows the exact income tax brackets and amounts applied to your total taxable income for FY2026-27
• Salary Sacrifice Calculator — models whether sacrificing part of your bonus into superannuation reduces your overall tax liability
• Superannuation Calculator — determines the 12% SG contribution your employer pays on your bonus and base salary
• Tax Return Calculator — estimates whether you will receive a tax refund or owe a balance when you lodge your return after receiving bonus income

Frequently Asked Questions