Australia sole trader & ABN tax calculator 2026
An Australian sole trader pays personal income tax on business profit using the 2026 resident rates: 0% up to $18,200, 16% to $45,000, 30% to $135,000, 37% to $190,000, and 45% above. Add the 2% Medicare levy. There is no compulsory super for sole traders.
This calculator estimates the income tax and Medicare levy an Australian sole trader owes on their net business profit for the 2026 income year, using the current Australian Taxation Office (ATO) resident tax brackets.
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Result
Australia Sole trader tax rates 2026
| Band or item | Rate |
|---|---|
| Up to A$18,200 | 0% (tax free) |
| A$18,200 to A$45,000 | 16% |
| A$45,000 to A$135,000 | 30% |
| A$135,000 to A$190,000 | 37% |
| Over A$190,000 | 45% |
| Social contributions (Medicare levy (2%)) | 2% |
Source: www.ato.gov.au
How is a sole trader taxed in Australia?
As a sole trader you and your business are the same legal person, so your net business profit is added to any other income and taxed at individual resident rates. You report it through your personal tax return, and there is no separate company tax rate to worry about.
The 2026 progressive brackets apply to your taxable income as follows:
- $0 to $18,200: 0% (the tax-free threshold)
- $18,201 to $45,000: 16%
- $45,001 to $135,000: 30%
- $135,001 to $190,000: 37%
- $190,001 and above: 45%
Only the slice of income inside each band is taxed at that band's rate, so your average rate stays well below the top marginal rate.
The Medicare levy and social contributions
On top of income tax, most residents pay the Medicare levy of 2% on their taxable income to help fund the public health system. For a sole trader this is calculated on the same profit figure as your income tax.
Unlike employees, a sole trader has no compulsory superannuation (super) obligation on their own drawings. You can choose to make voluntary super contributions to save for retirement, and these may be tax-deductible, but they are not a mandatory payroll charge. This calculator models the standard Medicare levy at 2% and does not apply the small business income tax offset (SBITO), which can reduce tax by up to $1,000.
A worked example at $80,000 profit
Suppose your net sole trader profit for 2026 is $80,000.
Income tax is built up band by band:
- First $18,200 at 0% = $0
- Next $26,800 ($18,201 to $45,000) at 16% = $4,288
- Next $35,000 ($45,001 to $80,000) at 30% = $10,500
That gives income tax of $14,788. Add the Medicare levy of 2% on $80,000 = $1,600.
Your total liability is about $16,388, leaving roughly $63,612 after tax. That is an effective rate of around 20.5% of profit, even though your top marginal rate is 30%.
Frequently asked questions
How much tax does an Australian sole trader pay?
A sole trader pays individual resident income tax on business profit: 0% up to $18,200, 16% to $45,000, 30% to $135,000, 37% to $190,000, and 45% above $190,000, plus a 2% Medicare levy.
What is the tax-free threshold for a sole trader in 2026?
The tax-free threshold is $18,200. You pay no income tax on the first $18,200 of taxable income, though the 2% Medicare levy can still apply above the low-income limits.
Do sole traders pay the Medicare levy?
Yes. Most resident sole traders pay the Medicare levy of 2% on their taxable income, in addition to income tax, calculated on the same profit figure.
Do sole traders have to pay superannuation for themselves?
No. There is no compulsory super on your own sole trader drawings. You can make voluntary contributions, which may be tax-deductible, but they are not a mandatory charge.
What tax would a sole trader pay on $80,000?
On $80,000 profit, income tax is about $14,788 (using the 16% and 30% bands) plus a 2% Medicare levy of $1,600, for a total of roughly $16,388.
What is the top tax rate for a sole trader in Australia?
The top marginal rate is 45%, applying to taxable income above $190,000, plus the 2% Medicare levy on that income.
Official sources
- Australian Taxation Office (ATO) — Corporate & personal income tax