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Sole Trader Tax Calculator 2026–27

Sole traders pay individual tax rates on business profit — no tax is withheld, so you set it aside yourself and may be put into PAYG instalments. The small business income tax offset trims up to $1,000.

Updated 2026-10-03 · ATO and official government rates

Tax to set aside$15,12018.9% of total income · $3,780 a quarter if paying PAYG instalments · 2026–27
Income tax (after LITO)$14,520
Medicare levy$1,600
Small business income tax offset (16%, max $1,000)−$1,000
Total$15,120
GST registration needed?Yes — turnover ≥ $75,000

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Related

Sole trader tax rates for 2026–27

There is no separate sole trader tax rate: business profit is added to any other income and taxed at the individual rates, with the tax-free threshold, the low income tax offset and the 2% Medicare levy all applying. What changes is the small business income tax offset, which takes 16% off the income tax on your business income, up to $1,000, if your aggregated turnover is under $5,000,000. The table assumes the profit is your only income and you hold private hospital cover.

Net business profitIncome tax after LITOMedicare levySmall business offsetTotal taxShare of profit
$45,000$3,695$900−$591$4,0048.9%
$60,000$8,420$1,200−$1,000$8,62014.4%
$80,000$14,520$1,600−$1,000$15,12018.9%
$100,000$20,520$2,000−$1,000$21,52021.5%
$150,000$36,570$3,000−$1,000$38,57025.7%

ABN tax calculator: adding ABN income to a salary

ABN income on top of a job is taxed at your marginal rate, because your salary has already used up the lower brackets. Someone earning $70,000 in wages with $25,000 of side-business profit pays $8,000 more tax and Medicare than on wages alone, before a small business offset of about $801. Their employer's withholding only covers the salary, so the rest is due when they lodge unless they set it aside or pay PAYG instalments.

The offset reaches its $1,000 cap once the income tax on your business income reaches $6,250. Above that, every extra dollar of profit is taxed at your full marginal rate.

PAYG instalments: paying sole trader tax during the year

PAYG instalments are pre-payments of the tax on business and investment income. The ATO automatically enters an individual into the system when all three of these are true: instalment income of $4,000 or more on the latest tax return, tax payable of $1,000 or more on the latest notice of assessment, and estimated (notional) tax of $500 or more. Instalment income is gross business and investment income, excluding GST and capital gains.

Most people pay quarterly, on the same dates as a quarterly BAS: 28 October, 28 February, 28 April and 28 July. If your most recent notional tax was under $8,000 and you are not required to be registered for GST, you may be offered a single annual instalment instead. Anyone new to business can enter voluntarily through myGov to avoid a large first-year bill. The instalments you pay are credited against your assessment when you lodge your return, which is due by 31 October if you lodge it yourself.

Super for yourself as a sole trader

Sole traders do not have to pay super guarantee for themselves, so nobody is putting 12% aside for your retirement unless you do it yourself. A personal contribution you claim as a tax deduction becomes a concessional contribution, which is taxed at 15% in the fund and counts towards the $32,500 concessional cap for 2026–27.

To claim the deduction you must give your fund a notice of intent in the approved form and receive the fund's acknowledgment. The deadline for the notice is the earlier of the day you lodge your return for that year and the end of the following income year. On a $100,000 profit, deducting a $10,000 contribution cuts your tax and Medicare by about $3,200 after allowing for a smaller small business offset, while the fund deducts $1,500 in contributions tax. That leaves a net saving of roughly $1,700.

Personal services income (PSI) rules for contractors

The PSI rules decide whether an ABN holder is really running a business or is closer to an employee. Income is PSI when more than half of it is a reward for your personal effort or skill, which covers many IT consultants, engineers, construction workers and medical practitioners. If the rules apply, you cannot claim deductions that an employee could not claim, and PSI earned through a company or trust is generally attributed back to you and taxed at your rates.

The rules do not apply if you self-assess as a personal services business (PSB). According to the ATO, you can do this by meeting the results test for at least 75% of your PSI, or by meeting one of the other three tests while less than 80% of your PSI comes from the same entity and its associates (the 80% rule).

  • Results test: for at least 75% of your PSI you are paid to produce a result, you supply the tools or equipment needed, and you must fix mistakes at your own cost. Hourly or daily rates usually fail the first condition.
  • Unrelated clients test: you earn PSI from two or more unrelated clients who engaged you after you offered your services to the public, for example through advertising. Word-of-mouth referrals generally do not count, and nor does work obtained through labour hire firms or by answering advertisements on online recruitment sites.
  • Employment test: you employ or contract others to do at least 20% (by market value) of the principal work, or you have one or more apprentices for at least 6 months of the year.
  • Business premises test: at all times in the year you use premises you own or lease exclusively, mainly to earn PSI, that are physically separate from your home and from your clients' premises.

Frequently asked questions

What tax rate do sole traders pay?

The same rates as employees: nil to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above, plus the Medicare levy. There is no separate sole trader tax rate.

Does the tax-free threshold apply to ABN income?

Yes. A resident sole trader pays no income tax on the first $18,200 of taxable income, whether it comes from wages or business profit. The threshold applies once across all your income.

How much tax should I set aside as a sole trader?

Use the calculator with your expected profit. On $80,000 of profit with no other income it suggests $15,120 for 2026–27, about 19% of profit, or $3,780 a quarter.

Do I need an accountant to lodge as a sole trader?

No. Individuals, including sole traders, can lodge their own return, which is due by 31 October if you prepare it yourself. Using a registered tax agent is optional.

Do sole traders have to register for GST?

Only once GST turnover reaches $75,000, or straight away if you drive a taxi or ride-sourcing vehicle. Registration is optional below that.

Sources

Figures are taken from official government publications and were last reviewed on 2026-10-03.

  1. ATO: Tax rates – Australian resident (Resident tax rates 2026–27 and 2025–26)
  2. ATO: Tax rates – foreign resident (Foreign resident tax rates 2025–26)
  3. ATO: Tax rates – working holiday makers (Working holiday maker tax rates 2025–26)
  4. ATO: Medicare levy reduction for low-income earners (Table: Medicare levy thresholds for a single individual, 2025–26)
  5. ATO: Medicare levy reduction – family income (family taxable income thresholds 2025–26, +$4,338 per dependent child)
  6. ATO: Medicare levy surcharge income, thresholds and rates (MLS income thresholds and rates for 2026–27 and 2025–26)
  7. ATO: Low income tax offset ($700 max; −5c per $1 over $37,500; −1.5c per $1 over $45,000; nil from $66,667)
  8. ATO: Seniors and pensioners tax offset (SAPTO rates and rebate income thresholds for 2025–26; 12.5c per $1 reduction)
  9. ATO: Study and training loan repayment thresholds and rates (Table 1: 2026–27, Table 2: 2025–26)
  10. ATO: Schedule 1 (NAT 1004) – Using a formula (x = whole dollars + 99c; round to nearest dollar, 50c up)
  11. ATO: Personal income tax – new tax cuts for every Australian taxpayer (2026–27 SAPTO thresholds)
  12. ATO: Schedule 15 – Tax table for working holiday makers (Table A: rates for 2026–27, payments from 1 July 2026)
  13. ATO: Schedule 1 – Statement of formulas for calculating amounts to be withheld (NAT 1004), payments from 1 July 2026 – weekly coefficients
  14. ATO: Schedule 1 (NAT 1004) – Withholding amounts sample data, weekly (from 1 July 2026)
  15. ATO: Schedule 8 – Statement of formulas for calculating study and training support loans components (NAT 3539), payments from 1 July 2026
  16. ATO: Key super rates and thresholds – Contributions caps (Table 1.1 concessional, Table 4 non-concessional)
  17. ATO: Understanding concessional and non-concessional contributions (concessional contributions taxed in the fund at 15%)
  18. ATO: Key super rates and thresholds – Division 293 tax (Table 7: $250,000 threshold, 15% rate)
  19. ATO: Key super rates and thresholds – Super guarantee (Table 21 SG %, Tables 23–24 maximum contribution base)
  20. ATO: Key super rates and thresholds – Government contributions (Table 25 co-contribution thresholds; LISTO)
  21. ATO: Low income super tax offset (15% of concessional contributions, max $500, income $37,000 or less)
  22. ATO: Key super rates and thresholds – Transfer balance cap (Table 26)
  23. ATO: Key super rates and thresholds – Payments from super (Table 12 preservation age)
  24. ATO: Key super rates and thresholds – Employment termination payments (Table 17 ETP cap, Table 20 genuine redundancy limits)
  25. ATO: How ETP components are taxed (17%/32% incl. Medicare; $180,000 whole-of-income cap; 45% + 2% above cap)
  26. ATO: How GST works (10% rate)
  27. ATO: Registering for GST (21 days to register, GST turnover test, taxi and ride-sourcing)
  28. ATO: CGT discount (50% individuals and trusts, 33.33% complying super funds, 12-month ownership)
  29. ATO: Tax reform – Reforming negative gearing and capital gains tax (applies from 1 July 2027)
  30. ATO: Changes to company tax rates (25% base rate entity, $50m aggregated turnover, 2021–22 and future years)
  31. ATO: Company tax rates 2025–26
  32. ATO: Instant asset write-off for eligible businesses (Table 1: $20,000, turnover under $10 million)
  33. ATO Small business newsroom: $20,000 instant asset write-off here to stay (permanent from 1 July 2026)
  34. ATO: Small business income tax offset
  35. Fair Work Ombudsman: Minimum wage increase starts today (1 July 2025 – $948.00/week, $24.95/hour, casual $31.19)
  36. Fair Work Ombudsman: Minimum wage increase starts today (1 July 2026 – $1,004.90/week, $26.44/hour, casual $33.05)
  37. Fair Work Commission: Annual Wage Review 2026 ([2026] FWCFB 3500, announced 2 June 2026)
  38. ATO: Starting PAYG instalments (entry thresholds, voluntary entry)
  39. ATO: When are PAYG instalments due? (quarterly dates, annual option, 31 October)
  40. ATO: Super for sole traders and partnerships
  41. ATO: Personal super contributions (notice of intent, time limits)
  42. ATO: Income that is PSI (more than 50% reward for personal effort or skill)
  43. ATO: Working out if the PSI rules apply (the 4 PSB tests)
  44. ATO: Self-assessing as a PSB (results test for 75% of PSI, or another test plus the 80% rule)
  45. ATO: Results test (75% of PSI, 3 conditions)
  46. ATO: Unrelated clients test (80% rule, offers to the public)
  47. ATO: Employment test (20% of principal work by market value, or an apprentice for 6 months)
  48. ATO: Business premises test
  49. ATO: Claiming deductions when receiving PSI (treated as in the same position as an employee)
  50. ATO: What to do when the PSI rules apply (attributing PSI earned through a company, partnership or trust)