How much tax will I get back if I earn $60,000?

Determining the exact tax refund you’ll receive on a $60,000 income is not so easy.

And while it’s possible to estimate based on tax brackets, there are numerous factors that also influence the final figure.

This article will guide you through the basics of Australian income tax, explain potential deductions, and provide insights into maximizing your refund.

Australian Income Tax Brackets

Australia operates a progressive tax system, meaning higher incomes attract higher tax rates.

Here’s a breakdown of the tax brackets for the 2023-2024 financial year:

  1. Tax-free threshold: Earn up to $18,200 and pay no tax.
  2. Tax bracket 1: Earn between $18,201 and $45,000, pay 19 cents for every dollar over $18,200.
  3. Tax bracket 2: Earn between $45,001 and $120,000, pay $5,092 plus 32.5 cents for every dollar over $45,000.
  4. Tax bracket 3: Earn between $120,001 and $180,000, pay $29,467 plus 37 cents for every dollar over $120,000.
  5. Tax bracket 4: Earn over $180,000, pay $51,667 plus 45 cents for every dollar over $180,000.

An income of $60,000 places you in tax bracket 2. This means you’ll pay $5,092 plus 32.5 cents for every dollar earned above $45,000.

How Much Tax Will I Pay on $60,000?

Based on the tax brackets, your income tax liability on $60,000 would be approximately $11,181.

This is calculated as follows:

  1. Tax on the first $45,000: $0
  2. Tax on the remaining $15,000: $15,000 * 0.325 = $4,875
  3. Total tax payable: $5,092 + $4,875 = $11,181

What Other Factors Affect My Tax Refund?

Though the above calculation provides a basic estimate, there are still many other factors that can impact your final tax refund.

They include:

  1. Tax deductions: These are expenses incurred for earning income. Common deductions include work-related expenses, self-education expenses, and donations to charity.
  2. Medicare levy: An additional 2% tax levied to fund Australia’s healthcare system.
  3. Medicare levy surcharge: Applies to higher-income earners without private health insurance.
  4. Low-income tax offset: A refundable tax offset for low and middle-income earners.
  5. Low and middle-income tax offset: Another refundable tax offset aimed at providing relief to middle-income earners.
  6. HELP debt: If you have a Higher Education Loan Program (HELP) debt, a portion of your tax refund may be used to repay this debt.

Can I Claim Deductions to Increase My Tax Refund?

Yes, claiming eligible deductions can reduce your taxable income, potentially increasing your tax refund.

Common deductions include:

  1. Work-related expenses
  2. Self-education expenses
  3. Donations to charity
  4. Rental property expenses (if applicable)

What Are Common Tax Deductions for Employees?

Some common tax deductions for employees include:

  1. Occupation-specific expenses (e.g. uniforms, tools)
  2. Travel expenses (if required for work)
  3. Self-education expenses (if related to your current job or future employment)
  4. Union fees

How Can I Increase My Tax Refund?

To raise your tax refund, you must focus on these main areas:

  1. Claim all eligible deductions: Keep detailed records of work-related expenses, self-education costs, and other deductible items.
  2. Consider private health insurance: If you’re eligible, private health insurance can potentially reduce your Medicare levy surcharge.
  3. Review your tax file number (TFN): Ensure your employer has the correct TFN to avoid overpayment of tax.
  4. Use a tax return calculator: Online tools can provide estimates of your potential refund based on your income and deductions.
  5. Seek professional advice: If your financial situation is complex, consider consulting a tax accountant for expert guidance.

What Tax Deductions Can I Claim on $60,000?

The tax deductions you can claim depend on your specific circumstances.

Some common deductions for individuals earning around $60,000 might include:

  1. Work-related expenses: Costs incurred while performing your job, such as travel, uniforms, and self-education expenses.
  2. Donations to charity: Eligible donations can be claimed as a tax deduction.
  3. Other deductions: Depending on your situation, you might be able to claim deductions for rental property expenses, investment losses, or other eligible items.

How Do I Lodge My Tax Return?

You can lodge your tax return online through the Australian Taxation Office (ATO) website, by mail, or through a registered tax agent.

You need to lodge your return by the due date to avoid penalties.

Several online tax return calculators can provide estimates of your potential refund.

These calculators typically ask for information about your income, deductions, and other relevant factors.

What If I Owe the ATO Money?

If you owe the ATO money after lodging your tax return, you’ll usually need to pay it back in full.

However, you might be able to arrange a payment plan if you’re unable to pay the full amount at once.

When Will I Receive My Tax Refund?

The ATO aims to process tax returns within a few weeks.

However, processing times can vary depending on the complexity of your return and the time of year.

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