The new marginal repayment system
From 1 July 2025, HECS/HELP repayments changed. Under the old system, once your income crossed a threshold you paid a flat percentage of your whole income, which meant a small pay rise could cost you more than it earned. The new marginal system works like income tax: you only repay a rate on the income above the threshold, so a raise never leaves you worse off. New to how this all works? Read how HECS repayments work in 2026-27 for the full explainer.
2025-26 repayment rates
| Repayment income | Compulsory repayment |
|---|---|
| Below $67,000 | Nil |
| $67,000 to $124,999 | 15c for each $1 over $67,000 |
| $125,000 to $179,285 | $8,700 + 17c for each $1 over $125,000 |
| $179,286 and over | 10% of your whole income |
The calculator defaults to 2026-27, where the thresholds are indexed up and repayments start at $69,528. The table above is the 2025-26 comparison. Switch the year in the calculator to see either. Verify the current figures at ato.gov.au. This tool is a guide, not tax advice.
Repayment vs indexation
These are two separate things people often confuse. Your repayment is the amount taken through your pay across the year, based on your income. Indexation is the once-a-year increase to your remaining balance on 1 June, now set at the lower of CPI or WPI. If your repayments are smaller than the yearly indexation, your balance can grow even while you’re paying, which is why the payoff timeline in the calculator matters.
HECS repayment thresholds & rates (2025-26)
Here is the full HECS/HELP repayment table for 2025-26. Each row is a repayment income band, the repayment rate that applies to it, and how the rate is worked out. The first HECS repayment threshold is $67,000: earn below it and you have no compulsory repayment. From there the rates are marginal, so you repay only on the income above the threshold, until the top band where the rate switches to 10% of your whole income.
| Repayment income threshold | Repayment rate | How it applies |
|---|---|---|
| Below $67,000 | Nil | No compulsory repayment |
| $67,000 to $124,999 | 15c for each $1 over $67,000 | Marginal |
| $125,000 to $179,285 | $8,700 + 17c for each $1 over $125,000 | Marginal |
| $179,286 and over | 10% of your whole income | Flat, whole income |
Thresholds are indexed each year: for 2026-27 the first threshold rises to $69,528. Repayment income is your taxable income plus reportable fringe benefits, reportable super contributions, net investment losses and exempt foreign employment income. Verify the current figures at ato.gov.au. This tool is a guide, not tax advice.
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Simon is the founder of Orbit Money, a tool that helps people track subscriptions and recurring spend. He builds Orbit's free money calculators and writes about personal finance for Australian and UK readers.
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