The next federal election in 2028 looks set to be a battle of the tax plans.<\/p>\n
Treasurer Jim Chalmers has dropped hints Labor may deliver more tax cuts<\/a> for wage earners. Meanwhile, Opposition Leader Angus Taylor has promised to fix \u201cbracket creep<\/a>\u201d by tying what people pay in income tax to inflation.<\/p>\n Labor\u2019s New South Wales Premier Chris Minns unexpectedly appeared to side with the Coalition<\/a> this week, suggesting some Australians were now working half of the week just to pay their income tax:<\/p>\n The top marginal [tax] rate of 47%, as I said in parliament last week, you\u2019re working Monday, Tuesday, and half of Wednesday for yourself, and then Wednesday, Thursday, and Friday for the government.<\/p>\n Is that true? <\/p>\n Let\u2019s take a look at the latest data on how much income tax typical Australian households paid in 2025.<\/p>\n How much Australians pay in tax<\/p>\n Most countries with comparable economies to Australia belong to the 38-nation Organisation for Economic Co-operation and Development (OECD).<\/p>\n Just weeks ago, the OECD released its latest annual Taxing Wages report<\/a>, showing the tax trends for full-time workers across all those countries for 2025. Their earnings ranged from just 67% of an average full-time wage, up to higher income earners on 167% of the average wage.<\/p>\n For Australian workers, the OECD used A$108,674 as the base level that an average full-time worker earned in 2024-2025.<\/p>\n Crucially, the OECD analysis also takes into account any other government benefits they received to come up with a net tax rate for each type of household. For example, if you receive a government cash payment \u2013 such as family tax benefits \u2013 that extra money balances out some of the tax you\u2019ve paid the government.<\/p>\n Taking that into account, the OECD report showed many Australians<\/a> paid less income tax last year than the OECD average. <\/p>\n Specifically, Australia\u2019s single full-time workers, single parents on a lower income with two kids and dual income couples without kids all paid less tax than in comparable wealthy countries.<\/p>\n The most any of them paid was 28.7% for a higher income single person (someone earning 167% more than the average wage). That was less than the OECD\u2019s average of 30.3%. <\/p>\n As an example, this is how a single Australian worker, earning an average wage, compared on tax rates against other OECD nations.<\/p>\n But there were some cases where Australians paid more. <\/p>\n For example, a married, dual income couple \u2013 both earning an average wage \u2013 with two kids paid a tax rate of 23.5% in 2025. This was higher than the OECD average of 21.5%. This couple would not receive any family tax benefit, as their income would be higher than the means tests allows.<\/p>\n The OECD analysis does not include investment income.<\/p>\n No one in Australia pays 47% on their entire salary<\/p>\n None of the households covered in the latest OECD analysis<\/a> were paying anything like a 47% tax rate \u2013 particularly once you also take into account government payments like family tax benefits.<\/p>\n But what about Australia\u2019s highest income earners, who weren\u2019t covered in that OECD analysis? <\/p>\n No, not even someone on a very high salary is paying 47% of their entire salary.<\/p>\n Australia has a highly progressive tax system<\/a>, with low income earners benefiting more from tax allowances such as the low income tax offset and transfer payments such as the family tax benefit.<\/p>\n Effective marginal tax rates vary based on income level and whether a person receives any government payments. Families tend to get more of those benefits \u2013 like family tax benefits \u2013 than singles. <\/p>\n Australia\u2019s highest tax rate of 47% only applies as a \u201cmarginal tax\u201d: meaning it\u2019s only applied on each extra dollar that people earn above the highest $190,000 threshold. Here\u2019s how it works.<\/p>\n The actual tax rates income earners pay<\/p>\n These are Australia\u2019s current marginal tax rates<\/a>, for the 2025-26 year. Note, there\u2019s an additional 2% Medicare levy for many taxpayers \u2013 taking the top tax rate to 47%.<\/p>\n Let\u2019s use an example. The New South Wales Premier Chris Minns\u2019s salary from July 1, 2025, was $348,301 (plus expenses)<\/a>. <\/p>\n Minns only has to pay the highest 47% tax rate (including the Medicare levy) on what he earns from $190,001 up: less than half of his total salary.<\/p>\n