For a 2025-26 return, the compulsory repayment on a HECS-HELP debt is worked out only on the income above $67,000, except at the top of the scale. That is new. The ATO says that from 1 July 2025 “compulsory repayments for student and training support debts have moved to a marginal repayment system”. Up to 2024-25 a single percentage applied to the whole of repayment income. A table from an older page, or from a site that has not refreshed, gives a different answer: the 2024-25 minimum repayment threshold was $54,435, against $67,000 for 2025-26.
HECS-HELP is one kind of HELP loan, and HELP is one of the loans the ATO calls study and training support loans. This guide uses the ATO’s terms where the difference matters.
This guide is for someone lodging their own 2025-26 return who has a HECS-HELP debt or another study and training support loan. Searches that say “2026” usually mean this return: the ATO’s page on the change refers to amounts refunded “when you lodge your 2026 tax return”. The guide rests on ATO pages and one Study Assist page from the Department of Education, all read in September 2026. InkCairn is an independent site, not the ATO and not a tax agent (see how guides are sourced), so where a step is InkCairn’s reading rather than something the ATO states, the guide says so. It cannot see your circumstances and is not personal tax advice. For when the return is due and what lateness can cost, see the 2025-26 lodgment deadline guide.
Which loans share this table
Six loan types share one set of thresholds and rates for a financial year: HELP (which includes HECS-HELP), VSL, SFSS, SSL, ABSTUDY SSL and AASL (previously TSL). The ATO says “All study and training loan types are covered by the same set of thresholds and rates applicable for each financial year.” There is no separate HECS-HELP table, so a search for “HECS repayment” needs the study and training support loan table below.
Someone with more than one type makes one compulsory repayment, which the ATO applies in this order: HELP, VSL, SFSS, SSL, ABSTUDY SSL, AASL. SFSS closed to new loans on 31 December 2003, but the ATO says existing SFSS loans continue to be collected through the tax system, so an older debt can still be in the mix.
What the repayment is worked out on
The ATO works the repayment out on repayment income, not on taxable income alone. Repayment income is the sum of five amounts:
- Taxable income, excluding any assessable First Home Super Saver (FHSS) released amounts.
- Reportable fringe benefits, regardless of the exempt status of your employer.
- Total net investment loss, including net rental losses.
- Reportable super contributions.
- Exempt foreign employment income amounts.
Two readings follow from that list. Both are InkCairn’s reading, not separate ATO statements.
- A loss or contribution on the list is added back. Net rental losses and reportable super contributions are both named, so taxable income that is lower because of them does not by itself make repayment income lower by the same amount. The ATO pages read for this guide do not spell the effect out, so ask the ATO if it decides which row applies to you.
- Anything that moves taxable income moves repayment income. Taxable income is the first item. A capital gain (see the CGT guide on shares) or a deduction (see the working from home deductions guide) changes it, and so can change which row of the table applies.
The repayment is based on your income alone. The ATO says “Your compulsory repayment is based on your income alone – not the income of your parents or spouse.” That is unlike the Medicare levy surcharge, whose threshold can be a family one. The two measures share two add-backs, reportable fringe benefits and reportable super contributions, but they are not the same test; the Medicare levy and surcharge guide sets out income for MLS purposes.
There is one family-income exception. The ATO says you won’t have to make a compulsory repayment if you have a spouse or dependants and, due to low family income, you are entitled to a reduction of the Medicare levy or don’t have to pay it. The ATO says to ask your employer not to withhold additional amounts by completing the Medicare levy variation declaration form (NAT 0929).
The 2025-26 thresholds and rates
The ATO’s rates page holds the 2026-27 table directly above the 2025-26 one, each under its own year heading. This is the table headed “2025–26 repayment thresholds and rates”, read from the rendered page in September 2026.
| Repayment income | Repayment on this income |
|---|---|
| $0 – $67,000 | Nil |
| $67,001 – $125,000 | 15c for each $1 over $67,000 |
| $125,001 – $179,285 | $8,700 plus 17c for each $1 over $125,000 |
| $179,286 and over | 10% of your total repayment income |
The ATO says the change is law: “Change to compulsory repayments are now law”. InkCairn did not read the legislation itself. The figures here rest on the ATO’s pages, which are guidance and not the text of the law.
Three points the table does not make obvious:
- The top band is not marginal. At $179,286 and over the repayment is 10% of total repayment income, not 10% of the excess. The ATO says there is “no change for people earning $179,286 or more”. InkCairn’s own arithmetic, not an ATO statement: the marginal calculation and the flat 10% come out almost exactly equal at that point, so the top band does not jump.
- Do not read the rate as “15%”. The 15c and 17c figures are marginal rates on the income above each band’s start. The 10% applies to the whole of repayment income. Mixing them up misstates every result.
- Thresholds move every year. The ATO says these rates and thresholds “will be indexed each year in line with average weekly earnings”, so never carry a figure into another year.
The ATO’s own 2025-26 example
Grace has a HELP debt, one employer and a repayment income of $80,000 in the 2025-26 income year. She pays 15% of her repayment income above $67,000, so her compulsory repayment is $1,950 (15% of $13,000). Before the law change it would have been $2,800, or 3.5% of her total $80,000. One other worked example on the ATO’s rates page is left out here because its own figures do not add up.
Indexation: what grows the balance
- When and on what. On 1 June each year the ATO applies indexation to the part of the accumulated loan that has remained unpaid for more than 11 months. A loan incurred in the last 11 months is not indexed on that 1 June.
- Which index. The lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). From 2025 the figure is calculated each year after the December CPI and WPI are released, from Australian Bureau of Statistics figures over the previous 2 years.
- The rates. Indexation applied on 1 June 2026 was 2.8%. Indexation applied on 1 June 2025 was 3.2%, which belongs to the year before and is not a 2025-26 figure.
- No interest. The ATO says no interest is charged on loan accounts, but loan amounts more than 11 months old are subject to indexation.
The ATO keys its table by the year indexation was applied, not by income year, and does not call any row “the 2025-26 indexation rate”. Treating the row labelled 2026, applied on 1 June 2026, as the one that falls inside the 2025-26 income year is InkCairn’s reading of that table.
Withholding and the assessment: why it can still surprise you
The mechanics are easy to misread. What an employer withholds is not the repayment.
- Extra tax is withheld inside PAYG. Under pay as you go withholding your employer withholds an additional amount from salary and wages to cover your compulsory repayment. The ATO says it may not be listed separately on your payslip, because it is included in the total PAYG withholding amount.
- The balance does not fall pay by pay. The ATO says withheld amounts are not applied to your loan account until you have lodged your return and a compulsory repayment has been calculated. The ATO says the loan balance does not reduce after each pay cycle. It is applied only as a lump sum after your income tax return is lodged.
- The assessment settles the difference. If the employer withheld less than the assessed repayment, Study Assist says you will need to pay the “gap” to the ATO. If too much was withheld and you have no outstanding tax or other Commonwealth debts, the ATO says you will receive a refund of the overpaid amounts at tax time.
For 2025-26 in particular, the ATO says that because of the marginal change you may have less tax withheld from your pay towards a compulsory repayment, and that any additional amounts already withheld may be refunded when you lodge your 2026 tax return, if you have no outstanding tax or other Commonwealth debts.
Why a bill can still arrive
- The employer was never told. The ATO says that if you don’t tell your employer about the loan they won’t know to withhold extra amounts, which “will likely result in you getting a tax bill when you lodge your tax return”. The ATO’s page also mentions the general interest charge if a bill is not paid on time.
- More than one source of income. The ATO says an employer doesn’t know how much you earn outside their employment. Its two ways to adjust are asking your employer to increase the tax they withhold, or voluntarily registering for PAYG instalments and varying the instalment amount.
- PAYG instalments. If you already pay instalments, the ATO says it takes the loan into account when it works out your instalment amount and rate. It also says the marginal change will not be applied to instalments until 1 July 2026. InkCairn’s reading: an instalment payer’s 2025-26 amounts may have been set on the older basis, which the assessment then settles.
Telling an employer
The ATO’s forms are the Tax file number declaration (NAT 3092) when you start a new job, answering “Yes” at Question 10, and the Withholding declaration (NAT 3093) if you are already working, answering “Yes” at Question 6. Each employer needs its own form. InkCairn’s caution: question numbers can change when a form is reissued, so check the wording on the form in front of you.
Voluntary repayments: what they change and what they don’t
The ATO rule. Voluntary repayments are in addition to compulsory repayments, and they are not refundable. The ATO says any voluntary repayments made towards your loan “will not reduce the compulsory repayment amount”. Voluntary repayments made through salary packaging are also in addition to compulsory repayments. A voluntary repayment you make yourself is not tax deductible.
What they do change is the balance. Study Assist says they reduce your HELP debt as soon as the ATO processes them. A lower balance also means a lower amount for indexation to be applied to on 1 June.
Two dates decide whether a voluntary repayment does what you want:
- To cut what 1 June indexation hits, the payment has to reduce the loan before indexation is applied on 1 June. The ATO says a payment made electronically or at Australia Post can take up to 4 business days to be received and appear on your ATO account. A cheque or money order needs postage time and then a further 4 business days after the ATO receives it. InkCairn’s suggestion: leave well over that before 1 June.
- To clear the whole balance, the ATO says it is best to make the repayment before you lodge your tax return. Lodge first and a compulsory repayment can still be included on the assessment.
The ATO also says not to make voluntary repayments before you have incurred a loan.
Whether a voluntary repayment is worth making is not something the ATO pages read for this guide rank, and it depends on your position, so this guide does not say. InkCairn’s suggestion: decide first which effect you are after, a lower indexation base or a cleared balance, because they have different deadlines, and ask the ATO or a registered tax agent if you are unsure.
Where the loan shows up
- Not in the return you fill in. The ATO says “You don’t have to provide loan information in your tax return.” There is no loan field to complete.
- On the notice of assessment. If you have a loan when you lodge and your repayment income is above the minimum repayment threshold, the ATO says it will work out your compulsory repayment and include it on your notice of assessment. That notice, not the return, is the document to read. It is raised even if the return is for an income year before you started studying.
- On the loan account. The ATO says the account record includes indexation amounts, voluntary and compulsory repayments, the 20% loan debt reduction and overseas levy amounts. The steps to see it, in ATO online services or the ATO app, sit behind a myGov sign-in. InkCairn did not sign in, so those steps are the ATO’s description, not something InkCairn tried.
Because the repayment is calculated when the return is lodged, lodging is also the moment a loan amount is assessed. The lodging dates are in the 2025-26 lodgment deadline guide.
When the debt is nearly cleared
Nothing stops automatically. When you pay off the loan in full, the ATO says to complete a new Withholding declaration (NAT 3093) so your employer knows you no longer need extra amounts withheld. The ATO says not to use a PAYG withholding variation application (NAT 2036) for this. Any overpaid amounts are refunded at assessment where you have no outstanding tax or other Commonwealth debts.
The one-off 20% debt reduction
A 2025-26 lodger may see this on the loan account as history. The ATO says it has completed processing the 20% reduction for all student and training support debts that existed on 1 June 2025, and that processing started in December 2025. The reduction was applied against the balance as at 1 June 2025, even where other effective dates show on the account. The ATO’s account page also describes how a loan credit is refunded.
It is not the same as the 20% discount on the amount borrowed that the ATO describes for AASL loans, which is granted when an Australian Apprentice successfully completes their apprenticeship.
2026-27: next year, not this return
Nothing in this section applies to a 2025-26 return.
- A higher minimum. The ATO’s table headed 2026-27 starts repayments above $69,528, and Study Assist states the same figure for 2026-27. The bands above it differ from the 2025-26 ones, so read them from the 2026-27 table when that return is the one you are preparing.
- The ATO’s page has both years. The 2026-27 table sits directly above the 2025-26 one. Check the heading before you copy a figure.
If your position is unclear
InkCairn’s suggestion: ask the ATO or a registered tax agent if you have more than one source of income, if your repayment income includes items you are not sure how to count, if you have a spouse or dependants and a low family income, or if a deceased estate or a bankruptcy is involved, which this guide does not cover.
If making a repayment would cause serious hardship, the ATO has a process to defer or amend it. The ATO says it will either not raise a repayment or reduce the amount required, and lists serious hardship as one ground among other special reasons, using the Defer or amend your compulsory repayment or overseas levy form (NAT 2471).
Left out on purpose: repayments for people living overseas, how deceased estates and bankruptcy are treated, borrowing limits, and any estimate of what your own repayment will be.