Claim the tax-free threshold from one payer at a time, usually the one paying you the most. For 2025-26 a full-year Australian resident pays no tax on the first $18,200 of taxable income, and the decision is which payer you claim it from. The mistake to avoid is saying Yes to the threshold question for two payers when your total income will be above $18,200. The ATO says too little tax may then be withheld and you may get a bill at tax time.
This guide is for someone with a 2025-26 return to finish, the income year 1 July 2025 to 30 June 2026, who is deciding what to tell a payer: a second job, a new job or a first job. It rests on ATO pages 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.
Two things are easy to mix up. What you tell a payer changes what is withheld from your pay during the year. What the ATO assesses is set when you lodge. Each is covered below, and the section on lodging says where the ATO’s own wording stops.
Which answer to give each payer
The ATO’s rules, applied to 2025-26 and worded as the ATO words them:
| Your situation | Threshold question on the TFN declaration |
|---|---|
| One payer, and you are an Australian resident for tax purposes | Yes |
| More than one payer, and your total income from all payers will be above $18,200 (2025-26) | Yes for one payer, usually the one paying the highest salary or wage. No for the others, who then withhold at the “no tax-free threshold” rate |
| More than one payer, and you are certain your total income from all payers will be $18,200 or less (2025-26) | You can choose Yes for each payer |
| You changed jobs and the previous payer has stopped paying you | You can answer Yes for the new payer, even if you claimed it from the previous one |
| Working holiday maker | No |
| Foreign resident for tax purposes | No, unless you receive an Australian Government pension or allowance, in which case Yes |
Residency for tax purposes decides most of this, and this guide does not work it out. Start at the ATO’s residency pages.
The threshold amount for 2025-26
The ATO’s resident rates table for 2025-26 charges no tax on taxable income from 0 to $18,200. Its plain-language page says “Most Australian residents can claim tax-free threshold on the first $18,200 of the income they earn in the income year.” That page names no income year, so the year here comes from the rates table, where each year has its own heading.
| Taxable income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each dollar over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30c for each dollar over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37c for each dollar over $135,000 |
| $190,001 and over | $51,638 plus 45c for each dollar over $190,000 |
The ATO says these rates are for someone who was an Australian resident for tax purposes for the full year and entitled to the full tax-free threshold. They exclude the Medicare levy of 2% and the Medicare levy surcharge; the Medicare levy and surcharge guide covers how those are worked out. One of the ATO’s own 2025-26 examples calls the first taxed bracket 16%.
Next year’s table, not this return’s. The ATO’s rates table for 2026-27 keeps the threshold at $18,200 and cuts the first taxed rate to 15c for each dollar over $18,200. Do not apply it to a 2025-26 return.
Part-year residents
If you were an Australian resident for only part of 2025-26, the ATO’s figures are a threshold of at least $13,464, with the remaining $4,736 of the full threshold pro-rated by the number of months you were a resident. The formula is $13,464 plus ($4,736 divided by 12, multiplied by the months you were a resident). The month you arrived or left counts.
The ATO’s examples show how months are counted on the 2025-26 paper return (question A2). Becoming a resident in November 2025 and staying one for the rest of the year is 8 months. Ceasing to be a resident in September 2025 is 3 months. In the ATO’s dated worked example, a person who became a foreign resident on 22 December 2025 counts 6 months, July to December, and pays no tax on the first $15,832.
You do not have to work it out. In myTax the ATO says “we will work out any tax-free threshold for you” from the information in your return, and myTax works out the number of months itself. On the paper return there is one further rule to keep in the ATO’s words: if you received an Australian Government pension or allowance that was not only Youth Allowance, JobSeeker Payment or a Special Benefit, question A2 says “you’re entitled to the full tax-free threshold”. The ATO’s 2026-27 part-year amounts were not read for this guide.
A person who was not an Australian resident at any time in 2025-26 cannot claim the threshold and pays tax on every dollar earned in Australia.
How you claim it and change it
The ATO rule: you claim the threshold on the Tax file number (TFN) declaration you give each payer, including Centrelink. On the paper form, NAT 3092, it is Question 9. InkCairn did not open the form itself: the ATO’s page says the downloadable version is no longer available, so the wording here is the ATO’s description of it.
Answer Yes if you are a resident and either you are not claiming it from another payer, or you are but your total income from all sources will be less than the tax-free threshold. Answer Yes also if you are a foreign resident receiving an Australian Government pension or allowance. Answer No if none of these applies, or if you are a working holiday maker. The ATO says recipients of JobSeeker Payment, Youth Allowance or Austudy are “likely to be already claiming” it from that payment.
Two ATO wordings differ by one dollar. The ATO’s page on completing the paper TFN declaration says “less than the tax-free threshold”. The ATO’s multiple-jobs page says “$18,200 or less”. At exactly $18,200 the 2025-26 rates table charges no tax either way, so the difference changes no tax outcome. What does matter is the multiple-jobs page’s condition that you be “certain” of your total.
The answer decides which column of the ATO’s tax table the payer uses to withhold: column 2 with the threshold claimed, column 3 without. A declaration applies to payments the payer makes after they receive it, and a new declaration overrides the old one. The ATO’s weekly table applies to payments made from 1 July 2026, so InkCairn’s reading is that a declaration you give now is applied against 2026-27 withholding, while the return you are lodging covers 2025-26. The threshold is $18,200 in both years’ tables.
If you quote no TFN, claim no exemption and have not told the payer you have applied for one, the ATO’s weekly table for payments made from 1 July 2026 has the payer withhold 47% from a resident and 45% from a foreign resident. After you apply for a TFN, the ATO says you have 28 days to give it to your payer.
Changing your answer later
To claim, or stop claiming, the threshold with a payer who already has your TFN declaration, the ATO’s route is a Withholding declaration (NAT 3093). The threshold is Question 5 on it. The ATO says it is available online through ATO online services via myGov, or as a form you order by phone or download. InkCairn did not open the online route, which needs a login, or the PDF. The declaration takes effect from the next payment.
The ATO’s Withholding declaration page was last updated in December 2024, older than the other pages read. Its rules match the ATO’s 2026 pages, so InkCairn uses it only for this form question.
A second job or second payer
The ATO rule: generally, claim the threshold from only one payer, usually the one who pays you the highest salary or wage. The ATO calls claiming it from more than one employer “a common mistake”.
Payers are not only employers. The ATO’s examples of a second payer include a second job, a part-time job together with a taxable pension or government allowance, and work under an ABN. All of that income counts towards the threshold.
- Total above $18,200 (2025-26). The ATO says to advise your other payers to withhold at the “no tax-free threshold” rate. It says you may also need to make a PAYG withholding variation application, in writing, by email, on paper or through an online form.
- Certain your total is $18,200 or less (2025-26). You can choose to claim from each payer. If your income later rises above $18,200, give one payer a Withholding declaration to stop claiming.
- Already claiming from two and over the line. The ATO says too little tax may have been withheld when your total income is above $18,200 from all employers and you have claimed from more than one, and that any bill is “due as a lump sum payment at the end of the financial year”.
InkCairn’s suggestion: answer the second payer only after adding up what every payer will pay you across the income year. If the total is uncertain, the ATO’s word “certain” is the test, and InkCairn would not rely on the exception. The ATO pages read for this guide do not say which payer to choose between a Centrelink payment and a job beyond “highest salary or wage”, so InkCairn does not either.
Claiming from one payer does not guarantee enough is withheld. One of the ATO’s 2025-26 examples, a person with a pension and a part-time job, ends in a tax bill. InkCairn does not reproduce its withholding amounts because they are not tied to a dated tax table in the pages read.
Changing jobs
The ATO rule: when you change jobs, your previous employer stops paying you, so you are no longer claiming from them. You can claim from the new payer even if you claimed from the previous one. The ATO’s example is a café job from July to January followed by a graduate job from February, with the threshold claimed from each in turn. You complete a TFN declaration for the new payer, and the ATO works out your total tax at lodgment.
InkCairn’s reading: that reasoning rests on the old payer stopping. If you keep the old job alongside the new one, you have two payers again and the second-job rules above apply.
How much tax if you do not claim it
There is no publishable figure here, and InkCairn would rather say why than guess. The ATO’s answer sits in its tax tables, which have a column for each case. The weekly table applies to payments made from 1 July 2026, and its amounts are in a Withholding lookup tool and a printable PDF on the ATO’s weekly tax table page. InkCairn did not open either download. The fortnightly and monthly tables were not read.
Two other ATO pages give weekly, fortnightly and monthly figures near the threshold, one set as what the threshold is “equivalent to” and the other as where withholding starts. The two sets differ, and neither names an income year or a tax table. InkCairn prints neither set, and no per-period withholding amount. The rates table above is an annual table for a full-year resident with the full threshold. It is not what a payer withholds from a single payment.
What it means when you lodge
The ATO says: “When you lodge your tax return, we assess all the income you earn and the tax withheld amount.” Too much withheld may mean a refund. Too little may mean a bill.
No ATO page read for this guide says in one sentence what a Yes or No to a payer does to the threshold on the return itself, so this guide says only what the ATO says: it assesses all your income against all your withholding. Claiming from one payer does not settle the outcome by itself.
If a bill arrives, the ATO says to pay by the due date on the notice of assessment, and that payment plans exist. It lists “incorrectly claimed the tax-free threshold for more than one job” among the reasons for a bill, and also multiple jobs or extra income, and changes to the Medicare levy or surcharge (see the Medicare levy and surcharge guide). The ATO’s ways to cover a shortfall during the year are:
- A Withholding declaration to stop claiming the threshold with one employer.
- Extra withholding by written agreement with a payer.
- PAYG instalments or prepayments.
Lodgment dates are in the 2025-26 lodgment deadline guide.
If your position is unclear
InkCairn’s suggestion: ask the ATO or a registered tax agent before you lodge if you have more than one payer and cannot be certain of your total, if you were a resident for part of the year, or if you have been claiming from two payers and have not checked what was withheld.
Left out on purpose: any per-period withholding amount, the withholding, refund and debt amounts in the ATO’s worked examples, the 2026-27 part-year amounts, and student-specific rules beyond residency.