The Pay Calculator also works as an Income Tax Calculator. Once you enter in details about your pay, you’ll see figures displayed in the Breakdown table which indicate the total amount of taxable income you earn, along with the amount of tax deducted from your salary or wages.
Pay calculator for salary earners
This is particularly useful if you are provided with an annual salary figure, but won’t be working with the company for the full year. In this instance, a salary calculator can help you calculate the amount of tax you will be paying based on your annual salary, versus the actual amount you will be required to pay at the end of the year.
For example:
- Your salary is $60,000 per year
- The projected total amount of annual tax you will pay is $11,067
- You will only be working for the company for six months of the year before travelling
- Your total tax paid in that time will be $5533.50
- As you only work for six months, your total earnings will therefore only be $30,000
- The actual total amount of annual tax you will pay for the year is $2,142
While you will still pay tax according to your projected annual earnings ($60,000), your end-of-year tax will only be calculated on your actual earnings ($30,000).
Example of income tax applied to earnings
| Annual salary | $60,000 |
|---|---|
Marginal tax rate | 32.5% |
Annual tax paid | $11,067 |
Annual take home pay | $48,933 |
Income tax calculator for wage earners
If you earn a wage and receive bonuses or overtime pay, you may find the amount of tax you pay differs between payslips. Your employer withholds a certain amount of your earnings to put aside for tax obligations, and calculates this amount each pay cycle.
The amount of tax that is deducted from your pay will depend on various factors, like whether you are subject to the Medicare levy surcharge (i.e. whether you have a suitable level of private health insurance).
If you have overpaid tax throughout the year due fluctuations in your wages, you will receive a refund at the end of the year.
You can use the Tax Return Calculator to estimate your end-of-year refund.
