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.
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 and over | $8,700 + 17c for each $1 over $125,000 |
For 2026-27 the thresholds are indexed up (repayments start at $69,528). 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.
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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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