Table of Contents
Running monthly payroll or verifying your own payslip requires a precise understanding of the ATO personal income tax system. For employers processing calendar-month payments, calculating accurate withholding relies entirely on the official monthly tax table (document NAT 1007).
This comprehensive guide breaks down how the table works, who it applies to, and how to stay compliant under the latest tax frameworks.
What Is the Monthly Tax Table?
The monthly tax table is the ATO’s official reference for calculating Pay As You Go (PAYG) withholding when wages, salary, or allowances are paid to an employee each month. Rather than an employer manually applying annual tax brackets on every pay run, the ATO pre-calculates the correct withholding amount for thousands of monthly earnings increments.
Crucial 2026 Tax Update
Important Update: The current version of the NAT 1007 table applies to all payments made from 1 July 2026 onward. This schedule reflects the newly legislated tax cuts, which reduced the lowest marginal tax rate from 16% to 15% for resident income between $18,201 and $45,000.
Because these baseline rates are lower than those used between July 2024 and June 2026, using outdated software or older PDFs will result in non-compliance. Always verify you are using the most recent release directly from ato.gov.au.
Who Needs to Use This Table?
- Employers who pay salaries, wages, allowances, and leave loading monthly should ensure their PAYG withholding obligations are calculated correctly. While this guide focuses on federal income tax withholding, employers should also understand their Payroll Tax obligations, as they are separate state-based employer taxes that may apply depending on annual wage thresholds.
- Paid parental leave and directors’ fees paid on a monthly cycle
- Salary and allowances to office holders, such as MPs, statutory office holders, defence force members, and police officers
- Labour-hire and religious practitioner payments
- Compensation, sickness, or accident payments calculated at a periodical rate because someone can’t work
- Payments to foreign residents
Note: Different schedules apply to shearers, horticultural workers, performing artists, and casual or daily-rate workers. Working holiday makers must always be taxed under Schedule 15, never the standard monthly table.
Is monthly PAYG withholding just the weekly figure multiplied by 4.33?
No. While a calendar year averages roughly 4.33 weeks per month, the ATO doesn’t simply scale the weekly tax table by that factor. The weekly tax table, fortnightly tax table, and monthly tax tables are each independently calculated from the same annual tax brackets, then rounded and structured to minimise under- or over-withholding across their own pay periods. Multiplying a weekly figure out will usually land close, but not exact, which is why payroll software always applies the dedicated monthly schedule.
What’s the difference between weekly, fortnightly, and monthly tax tables?
They’re built from the same annual tax brackets but divided across a different number of pay periods. 52 for the weekly tax table, 26 for the fortnightly tax table, and 12 for the monthly tax table are used throughout this guide.
Using the wrong table for an employee’s actual pay cycle will result in incorrect withholding on every single pay run. So it’s worth double-checking whether your payroll software is set to a weekly, fortnightly, or monthly pay cycle before your next pay run.
How to Calculate Monthly Withholding Manually
The ATO’s tax tables monthly schedule uses $4.33 income increments instead of whole-dollar amounts, allowing the monthly tax scales to increase gradually as earnings rise. Although the table may look detailed, working out the correct PAYG withholding amount is a simple 5-step process.
1. Total the monthly earnings.
Add the normal salary to any allowances, bonuses, or irregular payments in that pay run. Ignore cents; round down to the nearest whole dollar.
2. Find the earnings bracket.
Match the figure to the nearest row at or below the employee’s total earnings. Never round up to the next row.
3. Choose the right column.
Column 2 if the tax-free threshold is claimed, Column 3 if it isn’t (typically a second job).
4. Apply any tax offset.
Convert an annual offset entitlement into a monthly value using the ready reckoner (below), then subtract it from the Column 2 figure.
5. Adjust for the Medicare levy and study loans.
Apply any Medicare levy variation, then add any HELP, VSL, FS, SSL, or AASL component from its own separate monthly schedule.
Worked Example
An employee earns $4,311 in a calendar month. Claiming the tax-free threshold, you’d withhold $589. Not claiming it, you’d withhold $1,070, a gap of $481, which is the practical value of the tax-free threshold at this income level, spread across the month.
The Full Monthly Tax Table: Exact Withholding by Income Level
Below is a snapshot demonstrating exactly how PAYG values move across key income milestones under the updated July 2026 tax framework.
| Gross Monthly Earnings(Column 1) | With Tax-Free Threshold(Column 2) | No Tax-Free Threshold(Column 3) |
| $4.33 | $0.00 | $0.00 |
| $17.33 | $0.00 | $4.00 |
| $199.33 | $0.00 | $30.00 |
| $398.67 | $0.00 | $61.00 |
| $598.00 | $0.00 | $91.00 |
| $797.33 | $0.00 | $121.00 |
| $996.67 | $0.00 | $160.00 |
| $1,196.00 | $0.00 | $204.00 |
| $1,399.67 | $0.00 | $247.00 |
| $1,599.00 | $4.00 | $286.00 |
| $1,798.33 | $35.00 | $321.00 |
| $1,997.67 | $65.00 | $360.00 |
| $2,197.00 | $95.00 | $394.00 |
| $2,396.33 | $130.00 | $455.00 |
| $2,600.00 | $182.00 | $520.00 |
| $2,799.33 | $234.00 | $585.00 |
| $2,998.67 | $273.00 | $646.00 |
| $3,198.00 | $308.00 | $711.00 |
| $3,397.33 | $347.00 | $776.00 |
| $3,596.67 | $381.00 | $841.00 |
| $3,796.00 | $425.00 | $906.00 |
| $3,999.67 | $490.00 | $971.00 |
| $4,199.00 | $555.00 | $1,036.00 |
| $4,398.33 | $620.00 | $1,096.00 |
| $4,597.67 | $685.00 | $1,161.00 |
| $4,797.00 | $745.00 | $1,226.00 |
| $4,996.33 | $810.00 | $1,291.00 |
| $5,499.00 | $975.00 | $1,452.00 |
| $5,997.33 | $1,131.00 | $1,612.00 |
| $6,500.00 | $1,296.00 | $1,772.00 |
| $6,998.33 | $1,452.00 | $1,928.00 |
| $7,496.67 | $1,612.00 | $2,089.00 |
| $7,999.33 | $1,772.00 | $2,249.00 |
| $8,497.67 | $1,933.00 | $2,409.00 |
| $8,996.00 | $2,093.00 | $2,570.00 |
| $9,498.67 | $2,253.00 | $2,730.00 |
| $9,997.00 | $2,414.00 | $2,908.00 |
| $10,499.67 | $2,574.00 | $3,103.00 |
| $10,998.00 | $2,734.00 | $3,298.00 |
| $11,496.33 | $2,912.00 | $3,493.00 |
| $11,999.00 | $3,107.00 | $3,688.00 |
| $12,497.33 | $3,302.00 | $3,883.00 |
| $12,675.00 | $3,371.00 | $3,952.00 |
Note: The precise figures above outline baseline resident withholding and assume no secondary debt configurations or Medicare adjustments apply.
Earning More Than $12,675 a Month?
Once monthly earnings exceed $12,675, the printed table stops, and a formula takes over. Here’s the formula the ATO uses:
Beyond $12,675: The Formula Method
| Tax Profile | Monthly Earnings Bracket | Tax Withholding Formula |
With Tax-Free Threshold | $12,675.00 to $15,829.67 | $3,371 + 39 cents for every $1 over $12,675.00 |
| Above $15,829.66 | $4,602 + 47 cents for every $1 over $15,829.66 | |
Without Tax-Free Threshold | $12,675.00 to $14,313.00 | $3,952 + 39 cents for every $1 over $12,675.00 |
| Above $14,312.99 | $4,593 + 47 cents for every $1 over $14,312.99 |
Note: Round every result to the nearest whole dollar. This formula keeps a tax timetable monthly calculation accurate beyond the printed rows, and it’s the same approach the ATO applies across its other tax tables monthly documents once earnings exceed the top published bracket.
Ready Reckoner for Tax Offsets
If an employee has lodged a Withholding Declaration claiming an annual tax offset, convert the yearly figure into a monthly value and subtract it from the Column 2 amount. A selection of reference points:
| Amount Claimed ($) | Monthly Value ($) |
| 100 | 8 |
| 500 | 42 |
| 1,000 | 83 |
| 2,000 | 166 |
| 3,000 | 249 |
| 4,000 | 332 |
If the exact figure claimed isn’t listed, combine values. For example, a $422 offset is built from $400 ($33) plus $20 ($2), giving a monthly reduction of $35.
If you’re comparing this against monthly tax tables 2025 or earlier, note that the ready reckoner itself hasn’t changed; only the monthly tax schedule core withholding rates were adjusted for the 1 July 2026 cut.
Note: A tax offset can never be applied against Column 3, against foreign resident rates, or where the employee hasn’t provided a TFN.
Medicare Levy, Study Loans, no TFN, Holiday Pay, and Foreign Residents
These situations sit outside the standard ATO monthly tax tables and aren’t reflected anywhere on the monthly tax chart above, so each one needs to be calculated separately.
Medicare Levy Adjustments
Employees with a low income, or a spouse and dependants who qualify for a family income exemption, may be entitled to a reduced levy. Others may need an additional Medicare levy surcharge withheld.
Either scenario requires the employee to lodge a Medicare Levy Variation Declaration alongside their TFN declaration, and the adjustment is calculated using its own dedicated schedule rather than being baked into the standard monthly tax scales.
Study and Training Support Loans (HELP, VSL, FS, SSL, AASL)
Where an employee has an accumulated study loan debt on their TFN declaration or Withholding Declaration, add an extra component from the separate study and training support loans monthly schedule (not the main NAT 1007 table). Repayment thresholds are indexed annually, so check these figures each financial year.
When No TFN Has Been Provided
If an employee hasn’t quoted a TFN, hasn’t claimed an exemption from doing so, and hasn’t told you they’ve applied for one, withhold at the top rate: 47% for Australian residents, 45% for foreign residents, ignoring cents. No offsets, no Medicare levy adjustment, and no study loan component apply in this scenario. A 28-day grace period applies if the employee has told you they’ve lodged a TFN application.
Foreign Residents
Foreign resident employees are taxed differently because they can’t get the tax-free threshold and can’t claim offsets. The 2025-2026 monthly rates for foreign residents were:
| Monthly Earnings | Monthly Rate |
| $0 to $11,248 | 30 cents for each $1 |
| $11,249 to $15,829 | $3,374 plus 37 cents for each $1 of earnings over $11,248 |
| $15,830 & over | $5,069 plus 45 cents for each $1 of earnings over $15,829 |
If a foreign resident hasn’t provided a valid TFN, you must withhold a flat 45% instead of applying this scale.
Holiday Pay, Leave Loading, and Termination Payments
Where an employee continues working for you, ordinary holiday pay and long service leave are folded into normal monthly earnings and withheld using the standard table. Leave loading paid on a pro-rata basis follows the same rule. Once someone stops working for you, though, the standard monthly tax scales no longer apply to lump sum leave payments or employment termination payments: those fall under their own dedicated schedules, and no study loan withholding applies to lump sum termination payments at all.
What happens if I don’t claim the tax-free threshold?
You’ll have noticeably more tax withheld each pay, since your employer applies Column 3 instead of Column 2. Most people leave the threshold unclaimed deliberately when they have more than one job, because it can only be claimed with a single employer at a time. It isn’t a penalty; it’s spreading your annual tax-free allowance correctly so you’re not left with a large bill at tax time.
Although claiming or not claiming the tax-free threshold changes how much tax is withheld from each monthly pay, it doesn’t necessarily change your final tax liability. Try our Tax Return Calculator to estimate whether you’re likely to receive a tax refund or need to pay additional tax at the end of the financial year based on your total income and PAYG withholding.
What happens if there are 5 paydays in a month?
While weekly or fortnightly schedules fluctuate, sometimes resulting in 5 weekly or 3 fortnightly pays in a single month. This doesn’t happen on a true monthly pay cycle. Because a monthly schedule always has exactly 12 pay periods per year, the monthly tax table distributes an employee’s annual tax evenly across those 12 pay runs without any calendar variations.
How do pre-tax salary sacrifice arrangements impact monthly withholding?
If an employee enters into a formal, legally compliant pre-tax salary sacrifice arrangement (such as additional superannuation contributions or novated car leasing), the sacrificed amount directly reduces their gross taxable income. The employer must subtract the salary sacrifice amount from the employee’s total monthly earnings before searching for the relevant row in the monthly tax chart.
Does the monthly tax table change every year?
Not every year, but it does change whenever legislated tax rate changes, Medicare levy threshold indexation, or study loan repayment threshold updates take effect. The previous schedule held steady from 1 July 2024 through 30 June 2026, before a legislated tax cut brought in the rates used throughout this guide from 1 July 2026. Always confirm you’re using the current release.
Keeping accurate payroll records and applying the correct withholding schedules can also reduce compliance risks during tax time. Understanding common ATO Tax Return Audit Red Flags can help both employers and employees avoid reporting errors that may attract additional scrutiny from the Australian Taxation Office.
Summary Checklist for Employers
To ensure your monthly payroll processing remains fully compliant with current ATO operational standards:
- Verify that your payroll configuration is utilising the post-1 July 2026 updated ATO monthly tax tables.
- Double-check that every monthly employee has a completed, signed TFN Declaration safely on file.
- Ensure all cents are ignored, and gross monthly amounts are rounded down to the nearest whole dollar before using the lookup tables.
- Isolate irregular payments (such as annual bonuses or large back-pay amounts) and calculate them separately using Schedule 5.
- Layer in secondary withholding requirements (such as student loans) on top of the base PAYG calculation.
Let TaxByte handle your PAYG withholding.
If you need professional support with PAYG withholding, payroll compliance, or broader tax obligations, get in touch with the team at TaxByte. Whether you’re looking for ongoing business advice or an experienced Tax accountant Sydney businesses can rely on, our specialists can help simplify complex tax requirements and keep your obligations on track. We streamline compliance so you can focus on growing your business with confidence.
Ready to get started? Lock in a dedicated strategy session with one of our specialists.