Pay Rise After Tax Calculator
Discover the real financial impact of a salary increase by calculating your after-tax pay rise. Essential for negotiation and budgeting.
Quick Use Samples
Your Pay Rise
After-Tax Results
Breakdown of Your Pay Rise
Your current salary of $80,000 results in an estimated annual take-home pay of $58,733. A pay rise of $5,000 brings your new salary to $85,000. After tax, your new take-home pay is estimated to be $61,383. This means the $5,000 gross increase results in an actual take-home increase of $2,650 per year, because the additional income is taxed at your marginal rate.
Pay Rise Breakdown
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What is a Pay Rise After Tax Calculator?
A Pay Rise After Tax Calculator helps you understand the actual impact of a salary increase on your take-home pay after accounting for taxes and other deductions. It shows you how much extra money will actually land in your bank account from a pay rise, rather than just the headline gross increase amount.
Behind the Formula
The calculator compares your current after-tax income with your projected after-tax income after receiving a pay rise. It accounts for changes in your tax bracket, Medicare levy, and HECS-HELP repayments (if applicable) that might occur due to the increased income.
Expert Insights
- Due to Australia's progressive tax system, a percentage pay rise doesn't translate to the same percentage increase in take-home pay. As your income increases, portions of your raise may be taxed at higher marginal rates.
- The most significant 'tax shock' often happens when crossing into a new tax bracket, or when your income reaches the HECS-HELP repayment threshold for the first time.
- Salary packaging or salary sacrificing can be an effective way to maximize the value of a pay rise, potentially reducing your taxable income while increasing your benefits.
Actionable Tips
- Use this calculator when negotiating a pay rise to understand what your actual take-home benefit will be, helping you set realistic expectations.
- Consider timing your pay rise request with the start of a new financial year to maximize the time you'll benefit from the increased income before tax time.
- If your pay rise pushes you into a higher tax bracket, explore options like additional superannuation contributions to potentially reduce your taxable income.
Real-World Examples
Crossing a Tax Bracket
Sarah currently earns $89,000 and receives a $6,000 raise. While this is a 6.7% gross increase, her take-home pay only increases by about 5.8% because part of the raise is taxed at a higher rate as she crosses into the next tax bracket.
HECS-HELP Impact
James earns $46,000 and gets a $5,000 raise. His take-home benefit is less than expected because his new salary of $51,000 now requires HECS-HELP repayments, which weren't required at his previous income level.
Comparing Job Offers
Emma has two job offers: a $10,000 raise at her current company or a new job with a $12,000 higher salary but fewer benefits. The calculator helps her compare the actual after-tax difference to make a more informed decision.
Glossary of Terms
Marginal Tax Rate
The percentage of tax applied to your income for each tax bracket. As your income increases, additional dollars earned are taxed at the rate for the bracket they fall into.
Tax Bracket
Income ranges that are taxed at specific rates. Australia has a progressive tax system with increasing rates for higher income brackets.
Salary Packaging
An arrangement where an employee agrees to forgo part of their cash salary in return for benefits of similar value, which may provide tax advantages.