Millions of HECS debtors are lodging tax returns that reconcile a full year of PAYG withholding against the FY2026-27 marginal repayment bands for the first time, with 15% charged only on income above $69,528. Here's what to check before you lodge.
Key facts
| What changed | Detail |
|---|---|
| Minimum threshold | $69,528 |
| First marginal rate | 15% above threshold |
| Withholding method | STSL, per employer, per pay period |
| Reconciled at | Tax return assessment |
Why your notice of assessment matters this year
Your employer withholds STSL each pay period based on that job's income alone. At tax time, the ATO adds up your total repayment income across all employers and any investment income, applies the FY2026-27 marginal bands, and works out your actual compulsory repayment. Any gap between what was withheld and what you actually owe shows up as a refund or a bill on your notice of assessment.
The marginal system makes this reconciliation less brutal than it used to be. Under the old flat-rate rules, tipping just over the threshold made a percentage of your entire income repayable, so an under-withheld year could produce a four-figure surprise. Now the repayment scales smoothly — as our coverage of the FY2026-27 threshold rise to $69,528 shows, someone barely over the line owes tens of dollars, not thousands.
How the repayment is actually worked out
Take a graduate on $80,000 with no other income. Their repayment income exceeds the threshold by $10,472, and 15c in the dollar on that excess comes to roughly $1,571 for the year. If their employer withheld $30 a week in STSL — about $1,560 across 52 weeks — the assessment lands within a few dollars of what was withheld, and the notice of assessment simply moves the credit onto the loan. Remember that repayment income is broader than salary: reportable fringe benefits, reportable super contributions and net investment losses are all added back, which is a common reason assessments come in higher than the payslip maths suggests. Our HECS-HELP guide walks through the full definition.
Two jobs, two separate calculations
If you held two jobs that each paid under $69,528, neither employer would have withheld any STSL — but your combined repayment income from both jobs can still exceed the threshold. That produces an unexpected compulsory repayment at tax time. Ticking the HELP debt box on every TFN declaration doesn't eliminate this, since withholding tables only ever look at income from that one job. If you're in this position ongoing, you can ask one employer to withhold extra each pay, or simply set aside the shortfall yourself once you know the size of it.
What the 20% cut and indexation don't change here
The 20% debt reduction and the 2.8% indexation applied on 1 June 2026 both adjust your outstanding loan balance directly through the ATO — neither appears as a line item on your tax return. Your compulsory repayment for the year is simply your repayment income run through the bands, applied against whatever balance remains after those adjustments. The one place they matter at tax time: if your remaining balance is smaller than your calculated repayment, you only repay what's left, and any excess withholding comes back as a refund.
What this means for your pay
If your income moved during the year — a raise, a new job, or extra hours — it's worth checking whether enough STSL was withheld before you lodge. Estimate your compulsory repayment with our HECS-HELP calculator, then run your full return through our tax return calculator to see whether you're tracking toward a refund or a bill this year.