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Tax calculator

Low Income Tax Offset Calculator (LITO)

Enter your taxable income to see the low income tax offset you get for 2025-26, up to $700, and exactly how much it cuts your income tax. This LITO calculator uses current ATO figures. Free, no signup.

Free, no signup2025-26 ATO figuresUp to $700Verify at ato.gov.au
Your income
Your taxable income for the 2025-26 year, after deductions
$
The LITO is applied automatically when the ATO assesses your return. There is nothing to claim and no form to lodge.
Your low income tax offset (2025-26)
$575.00
Between $37,500 and $45,000 the offset drops by 5c for every $1 over $37,500.
Income tax before offset2025-26 resident rates$3,488.00
LITO applied− $575.00
Income tax after offset$2,913.00
The offset lowers your income tax, not the Medicare levy. To see your full pay after tax, levy and super, use the take-home pay calculator.
2025-26 LITO: $700 up to $37,500, phasing to nil at $66,667. Australia. Source: ato.gov.au. General information, not tax advice.
Simon Chadwick
Simon Chadwick
Founder, Orbit Money
Method: ATO low income tax offset, 2025-26Updated: 17 July 2026Sources: ato.gov.au/low-income-tax-offset

What the low income tax offset is

The low income tax offset (LITO) reduces the income tax paid by lower earners. It is worth up to $700 and applies to Australian residents with a taxable income under $66,667. Because it is an offset rather than a deduction, it comes off your tax bill directly: a $700 offset cuts your tax by $700, dollar for dollar. You do not apply for it, and there is no form to lodge. The ATO works it out from your return and applies it at assessment.

2025–26 LITO rates and thresholds

Taxable incomeLow income tax offset
$37,500 or less$700 (the maximum)
$37,501 – $45,000$700 minus 5c for every $1 over $37,500
$45,001 – $66,667$325 minus 1.5c for every $1 over $45,000
Above $66,667Nil

Figures are the 2025–26 LITO rates published by the ATO. Verify the current year at ato.gov.au. This tool is a guide, not tax advice.

A worked example

Say your taxable income for 2025–26 is $40,000. That sits in the first taper band, between $37,500 and $45,000. You start with the full $700 and subtract 5 cents for every dollar over $37,500. That is $40,000 minus $37,500, which is $2,500, times 5 cents, so $125 comes off. Your LITO is $700 minus $125, or $575. That $575 comes straight off the income tax on your $40,000, so you keep more of your pay.

Non-refundable, and it does not touch the Medicare levy

The LITO is non-refundable. It can bring your income tax down to zero, but no further. If your offset is bigger than the tax you owe, the extra is not paid out as a refund, so a very low earner with little or no tax to pay may not use the whole $700. The offset also reduces income tax only, not the 2% Medicare levy, which is worked out separately. The calculator above shows how much of your offset cancels tax and flags any unused amount.

LITO is not the old LMITO

The LITO is often mixed up with the low and middle income tax offset (LMITO), the temporary offset of up to $1,500 that finished after the 2021–22 year. The LMITO has ended. The LITO is the ongoing offset and still applies for 2025–26. If you are looking for a $1,080 or $1,500 offset, that was the LMITO and it is no longer available.

Frequently asked questions

How do you calculate the low income tax offset?
Start from your taxable income. If it is $37,500 or less you get the full $700. Between $37,501 and $45,000 you take $700 and subtract 5 cents for every dollar over $37,500, which lands at $325 by $45,000. Between $45,001 and $66,667 you take that $325 and subtract 1.5 cents for every dollar over $45,000, reaching nil at $66,667. For example, on $40,000 the offset is $700 minus $125, so $575. Above $66,667 no LITO applies.
What is the low income tax offset for 2026?
For the 2025-26 income year the low income tax offset is worth up to $700. You get the full $700 if your taxable income is $37,500 or less, a reducing amount between $37,501 and $66,667, and nothing above $66,667. The rates and thresholds are unchanged from recent years, so the same figures apply for returns lodged in 2026.
What is the $700 low income tax offset?
The $700 figure is the maximum low income tax offset. It goes to residents with a taxable income of $37,500 or less. The LITO is a tax offset, so it reduces the income tax you owe dollar for dollar rather than being a payment or a deduction. Once your income passes $37,500 the $700 starts to taper down.
Who qualifies for the low income tax offset?
The LITO is for Australian residents for tax purposes with a taxable income under $66,667. You do not need to be working to qualify, and you do not apply for it. If your income is in range, the ATO applies the offset automatically when it assesses your return. Foreign residents for the full year do not get the LITO.
Does the low income tax offset still exist?
Yes. The low income tax offset (LITO) is current for 2025-26 and gives up to $700. What ended was the separate low and middle income tax offset (LMITO), the temporary offset of up to $1,500 that finished after the 2021-22 year. The two are often confused. The LMITO is gone, the LITO remains.
Is the low income tax offset refundable?
No. The LITO is non-refundable, so it can reduce your income tax to zero but not below. If the offset is larger than the tax you owe, you do not get the difference back as a refund. It also only reduces income tax, not the Medicare levy. This calculator shows how much of your offset cancels tax and how much, if any, goes unused.

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Simon Chadwick
About the author
Simon Chadwick
Founder of Orbit Money

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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This tool is a guide, not tax or financial advice.