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See exactly how much extra money you keep after tax when you get a pay rise. Understand the impact of marginal tax rates in FY2025-26.
A pay rise increases your take-home pay by less than the gross amount because the additional income is taxed at your marginal tax rate, not your average tax rate.
Australia's progressive income tax system applies higher rates to each additional dollar earned above a threshold. An employee on $80,000 has an average tax rate of roughly 22%, but the marginal rate on every extra dollar is 30% plus 2% Medicare levy. That means for every $1,000 of gross pay rise, only $680 reaches the bank account. The remaining $320 goes to the ATO as income tax and Medicare.
This pay rise calculator computes your exact before-and-after take-home pay for FY2025-26 using the current Australian tax brackets. Enter your current base salary and the raise amount to see the net benefit broken down by week, fortnight, and year. For a full breakdown of your current pay, use our Take-Home Pay Calculator.
Example: A $10,000 pay rise on an $80,000 salary yields approximately $6,800 extra take-home pay per year, or $130.77 extra per week after tax and Medicare.
The table below shows how pay rises of different sizes translate into after-tax income across 5 salary levels in the 2025-26 financial year. Each row calculates income tax, Medicare levy, and the resulting net weekly boost.
| Base Salary | Gross Raise | Extra Tax + Med | Net Annual Benefit | Net Weekly Boost |
|---|---|---|---|---|
| $60,000 | +$5,000 | -$1,675 | +$3,325 | +$64/wk |
| $80,000 | +$10,000 | -$3,200 | +$6,800 | +$131/wk |
| $100,000 | +$15,000 | -$4,800 | +$10,200 | +$196/wk |
| $120,000 | +$20,000 | -$6,750 | +$13,250 | +$255/wk |
| $150,000 | +$20,000 | -$7,800 | +$12,200 | +$235/wk |
*Calculations include income tax and Medicare levy for FY2025-26 Australian residents. HECS-HELP repayments, salary sacrifice, and the "Medicare Levy Surcharge" are excluded. Use our HECS-HELP Calculator to model student loan repayment impact.
A 10% gross pay rise produces less than 10% additional take-home pay because the raise is taxed at the marginal rate, which is higher than the average rate applied to total income.
The Australian Tax Office applies income tax brackets progressively. The first $18,200 of assessable income is tax-free. Income between $18,201 and $45,000 is taxed at 16%. Income between $45,001 and $135,000 is taxed at 30%. Income between $135,001 and $190,000 is taxed at 37%. Income above $190,000 is taxed at 45%. The 2% Medicare levy applies on top of all these rates.
An employee earning $90,000 receives a 10% pay rise of $9,000, bringing the new gross salary to $99,000. The entire $9,000 falls within the $45,001-$135,000 bracket, so the marginal rate is 32% (30% tax + 2% Medicare). The additional tax is approximately $2,880. The net take-home increase is $6,120 per year, or roughly $117.69 per week. That is a 6.8% increase in take-home pay from a 10% gross rise. View the full tax bracket schedule on our Australian Tax Brackets page.
| Salary | Average Tax Rate | Marginal Rate (incl. Medicare) | Cents Kept per Extra $1 |
|---|---|---|---|
| $45,000 | 7.3% | 32% | 68c |
| $80,000 | 22.0% | 32% | 68c |
| $120,000 | 27.2% | 32% | 68c |
| $150,000 | 30.7% | 39% | 61c |
| $200,000 | 34.2% | 47% | 53c |
An employee on $80,000 keeps 68 cents of every additional dollar earned. An employee on $200,000 keeps only 53 cents. The gap between average and marginal rates widens as income increases.
The average annual wage increase in Australia is 3.5% to 4.0% as of late 2025, according to the Australian Bureau of Statistics Wage Price Index. This translates to roughly $3,430 on the national average full-time salary of $98,000.
Pay rises vary significantly by industry, role seniority, and location. The mining sector leads with average increases of 5.2%, followed by technology at 4.8%, and healthcare at 4.1%. Retail and hospitality typically see smaller increases of 2.5% to 3.0%. These figures represent base salary adjustments and exclude bonuses, overtime, and superannuation increases.
A pay rise below the inflation rate results in a real wage decrease. With CPI running at approximately 2.8% in early 2026, a 3% nominal pay rise delivers only 0.2% real growth in purchasing power. Use our Income Tax Calculator to compare your current and proposed salary in after-tax terms, then adjust for inflation to assess whether the offer genuinely improves your financial position.
This pay rise calculator serves 3 primary groups of Australian workers: employees preparing for salary negotiations, job seekers comparing offers, and HR professionals modelling compensation changes.
Don't just ask for more money because of inflation. Track your specific achievements over the last 6-12 months. Did you save the company money? Drive new revenue? Take on duties outside your job description?
Check current job listings and recruitment agency salary guides for your exact role and location. Knowing the "market rate" turns an emotional request into an objective business conversation.
The best time to ask is either 3-4 months before the end of the financial year (when budgets are being set) or immediately after successfully completing a major project.
When negotiating, always talk in terms of the Total Package or Base Gross Salary. Do not negotiate based on what you want to "take home" every week, as your employer doesn't control the tax rates.
Employees and employers make 5 frequent errors when estimating the value of a pay rise. Each mistake leads to unrealistic expectations about after-tax income.
Pay rise calculations connect to several other Australian tax and salary tools. Use the calculators below to model the full impact of a salary change on taxation, superannuation, and net pay.
Calculations for the pay rise breakdown are based on:
Want to see exactly where the tax rates change? View our guide on the current tax thresholds.
View Tax Brackets →Last verified: 14 March 2026. Our content is based on the latest information from official Australian government sources.