Income Tax Calculator - Average Rate of Tax
- Arnold Shields
- Apr 12, 2010
- 2 min read
Updated: Jun 20
Income Tax in Australia: A 15-Year Decline
Over the past 15 years, income tax rates in Australia have consistently fallen. For high-income earners, the top marginal tax rate for the 2011 financial year was 46.5%, including the 1.5% Medicare levy. This top rate applied to income over $180,000.
But while marginal rates often make headlines, it's the average rate of tax that tells the real story of what Australians actually pay.
What Is the Average Rate of Tax?
The average tax rate is calculated by dividing the total amount of tax paid by the total taxable income. It reflects how much tax, on average, is paid across all income, not just the top dollar earned.
This is different to the marginal tax rate, which only applies to the last dollar earned. The marginal rate is still essential when evaluating tax impacts of extra income, investments, or deductions.
Average Tax Paid on Common Incomes – 2011 Financial Year
Below is a breakdown of average income tax rates across various income levels for the 2011 financial year:
Income ($) | Total Income Tax (Inc. Medicare Levy) | Average Tax Rate (%) |
10,000 | 0 | 0.00 |
20,000 | 821 | 4.10 |
30,000 | 2,550 | 8.50 |
40,000 | 5,050 | 12.63 |
50,000 | 8,600 | 17.20 |
60,000 | 12,150 | 20.25 |
70,000 | 15,600 | 22.29 |
80,000 | 18,750 | 23.44 |
90,000 | 22,600 | 25.11 |
100,000 | 26,450 | 26.45 |
120,000 | 34,150 | 28.46 |
150,000 | 45,700 | 30.47 |
180,000 | 57,250 | 31.81 |
200,000 | 66,550 | 33.28 |
250,000 | 89,800 | 35.92 |
As you can see:
The average taxpayer earning $70,000 paid around 22% in tax.
A high-income earner on $200,000 paid an average tax rate of 33%, down from 42% in 2001 — a saving of nearly $18,000 per year.
Why It Matters
The declining average tax rates over the last decade mean more take-home pay for Australians, especially those in higher brackets. It also opens up opportunities for tax planning strategies that can further reduce your average tax rate through superannuation contributions, deductions, and smart structuring.
Need Help Calculating Your Tax?
Use our Income Tax Calculator to estimate your total tax liability for any income level between 2001 and 2011, quickly and accurately.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
