Sole trader tax calculator (2026-27 and 2025-26)
As a sole trader, your business profit is added to any other income (wages, interest) and taxed at your personal rates. Nothing is withheld from your business income, so the common question is how much should I put aside? This estimates the full year's bill and shows how much of it comes from the business.
Everything runs in your browser. Nothing you type is sent anywhere or saved. Rates checked against the ATO on 17 Oct 2026.
Worked examplesSetting money asideWhat's includedFAQSources
What's included
- Resident tax rates 2026-27: 0 to $18,200 nil · $18,201 to $45,000 15% · $45,001 to $135,000 $4,020 + 30% · $135,001 to $190,000 $31,020 + 37% · over $190,000 $51,370 + 45%. (2025-26: 16%, $4,288, $31,288, $51,638.)
- Low income tax offset: $700 up to $37,500, reducing by 5c per $1 to $45,000, then by 1.5c per $1, reaching nil at $66,667.
- Small business income tax offset: 16% of the income tax on your net small business income (its share of taxable income), capped at $1,000. Turnover must be under $5 million.
- Medicare levy: 2%, reduced for singles with taxable income between $28,011 and $35,013, and nil at or below $28,011.
- Set-aside: "tax from the business" is the total bill minus what the bill would be on your other income alone. Divided by your profit, it's a reasonable percentage to move into a tax account each time you're paid.
Not included: Medicare levy surcharge (if you have no private hospital cover and income over $105,000 as a single), family Medicare reductions, HELP/student loan repayments, the seniors offset, non-resident rates, and PAYG instalments already paid. The Medicare low-income thresholds shown for 2026-27 are the latest the ATO has published (labelled 2025-26); new thresholds are usually set in the following Budget.
Sources (checked 17 Oct 2026): ATO Tax rates: Australian resident (2026-27 and 2025-26 tables); ATO Low income tax offset; ATO Small business income tax offset; ATO Medicare levy reduction for low-income earners.
General information, not tax advice. This is an estimate for Australian residents. Your actual assessment can differ. Check with the ATO or a registered tax agent.
Worked examples (2026-27)
| 1. $60,000 profit, no other income | 2. $40,000 profit + $50,000 wages | 3. $120,000 profit | |
|---|---|---|---|
| Taxable income | $60,000 | $90,000 | $120,000 |
| Income tax | $8,520.00 | $17,520.00 | $26,520.00 |
| Low income tax offset | −$100.00 | $0.00 | $0.00 |
| Small business income tax offset | −$1,000.00 | −$1,000.00 | −$1,000.00 |
| Medicare levy (2%) | $1,200.00 | $1,800.00 | $2,400.00 |
| Total tax for the year | $8,620.00 | $18,320.00 | $27,920.00 |
| Of which from the business | $8,620.00 | $12,050.00 | $27,920.00 |
| Set-aside rate on profit | 14.37% | 30.13% | 23.27% |
How example 1 works: tax on $60,000 is $4,020 + 30% of the $15,000 over $45,000 = $8,520. The low income tax offset is $325 − 1.5% of $15,000 = $100. The small business offset is 16% of $8,520 = $1,363, capped at $1,000. The Medicare levy is 2% of $60,000 = $1,200. In example 2, the wages alone would cost $6,270 in tax, so the business adds $12,050 (30.13% of its profit) because it's taxed at your top rate. If $8,000 was withheld from the wages, about $10,320 would be left to pay.
Setting money aside each time you're paid
The set-aside rate above is a share of profit. You're paid gross amounts, though, so open "turn this into a set-aside per payment" in the form and enter your sales before expenses: the calculator converts the rate into a share of what you receive, and adds the GST if you're registered. For example 1 with $85,000 of sales (excluding GST) and GST registration, each $1,100 payment works out as $100.00 GST + $101.40 tax = $201.40 to set aside, keeping $898.60. Move it to a separate account the day you're paid. Our PAYG instalment calculator shows what the ATO may ask you to prepay each quarter, and the BAS due dates page shows when.
Frequently asked questions
How is a sole trader taxed in Australia?
Your business profit (income minus business expenses) is added to any other income, such as wages or interest, and taxed at the personal income tax rates. For 2026-27 that's nil up to $18,200, then 15%, 30%, 37% and 45%, plus the 2% Medicare levy. There's no separate business tax return; it all goes in your individual return.
How much should a sole trader set aside for tax?
It depends on your total income. Use the 'set-aside rate' from this calculator: it's the extra tax your business adds, divided by your profit. As a rough guide, on $60,000 of profit and no other income it's about 14% of profit in 2026-27, and about 30% if you also earn $50,000 in wages. If you're registered for GST, set aside the GST in each payment (one-eleventh) as well.
Do sole traders pay tax quarterly?
Not at first. Once you've lodged a return with business income, the ATO may put you into PAYG instalments, which are quarterly prepayments towards next year's tax, usually paid with your BAS. Until then, the whole year's tax is due after you lodge your return, which is why setting money aside matters.
What is the small business income tax offset?
If your business turnover is under $5 million, you can get an offset of 16% of the income tax on your net small business income, up to $1,000 a year. It's worked out automatically when you lodge, and this calculator includes it.
Do I pay the Medicare levy as a sole trader?
Yes. The 2% Medicare levy is worked out on your whole taxable income, including business profit, with a reduction for low incomes. Without private hospital cover, the Medicare levy surcharge may also apply above certain incomes. That isn't included here.
Is GST part of my taxable income?
No. If you're registered for GST, the GST you collect belongs to the ATO and isn't income, and the GST credits you claim aren't expenses. Enter your profit excluding GST. If you're not registered, there's no GST in your prices to remove.
What if my business made a loss?
This estimate treats a business loss as $0. A sole trader's business loss can only reduce other income, such as wages, if you meet the non-commercial loss rules; otherwise it's carried forward to a future year. Check with the ATO or a registered tax agent.
Does this include HELP debt or super?
No. HELP and other study loan repayments, the Medicare levy surcharge, personal super contribution deductions and PAYG instalments already paid are not included. Talk to a registered tax agent for a full estimate.
Related
- PAYG instalment calculator (the ATO may ask you to prepay quarterly) · GST calculator · BAS due dates · Cents per km · Work from home · Instant asset write-off · Do I need to register for GST?
- AU GST & BAS Workbook: track income and expenses all year so the profit figure above is easy to find