Enter business income, expenses and any other taxable income to estimate your combined individual tax, small business offset, GST and remaining balance after PAYG credits.
All personal incomeSmall business offsetPAYG credits
01 —INPUTS
Total income received before expenses
Before tax withheld. Business profit is taxed together with this income.
Credits against the annual estimate; this does not reduce the tax liability itself.
Personal contribution. The 2026-27 concessional cap is $32,500 across all concessional contributions.
As a sole trader (ABN holder), you're taxed as an individual. Your business profit — income minus allowable deductions — is added to your personal income and taxed at marginal rates. There is no separate "business tax rate" for sole traders.
Many people searching for a sole trader tax rate, freelancer tax rate, or ABN tax rate are really looking for the personal tax outcome on business profit after deductions.
Sole trader formula
→Taxable Income = Business Profit + Other Taxable Income − Deductible Personal Super
→Total Tax = Basic Income Tax − LITO − Small Business Offset + Medicare + MLS + HELP
→Combined After-Tax Income = Business Receipts + Other Income − Expenses − GST − Total Tax − Voluntary Super
If you're registered for GST, your income and expenses are converted to GST-exclusive amounts for income tax purposes. GST collected and credits are handled separately via your BAS.
Small business offset: For eligible sole traders, the calculator applies 16% to the proportion of basic income tax attributable to net small business income, capped at $1,000. Turn the option off if the income is excluded, such as PSI that is not from a personal services business, or if the aggregated-turnover test is not met.
2026-27 tax brackets for sole traders
Taxable income
Tax rate
Tax on this bracket
$0 – $18,200
0%
Nil
$18,201 – $45,000
15%
15c for each $1 over $18,200
$45,001 – $135,000
30%
$4,020 + 30c for each $1 over $45,000
$135,001 – $190,000
37%
$31,020 + 37c for each $1 over $135,000
$190,001+
45%
$51,370 + 45c for each $1 over $190,000
LITO may reduce income tax for eligible low-income residents. The Medicare levy can also be reduced or nil at lower incomes rather than always being a flat 2%.
Common sole trader deductions
→Motor vehicle — Logbook method (business % of actual costs) or cents-per-km method (91c/km for 2026-27, capped at 5,000 km).
→Home office — Fixed rate method (70c/hour for 2026-27) or actual cost method where eligible.
→Phone & internet — Business portion based on usage records or a reasonable estimate.
→Tools & equipment — Depreciation rules and temporary instant write-off settings can change — check the current ATO threshold.
GST is separate from income tax. The GST-exclusive amounts are used to calculate your income tax liability.
PAYG instalments
The ATO may require you to make quarterly PAYG instalment payments based on your estimated annual tax. This spreads your tax payments across the year rather than paying a lump sum at tax time.
→Quarterly due dates — 28 October, 28 February, 28 April, and 28 July.
→Amount method — ATO provides an instalment amount based on your last return.
→Rate method — Apply the ATO-provided rate to your actual business income each quarter.
→Reporting — Report on your BAS (Business Activity Statement).
First year tip
Use the calculator's tax and HELP result as a starting cash reserve, then reconcile it with your actual ATO instalment notice or rate. A blanket percentage can materially over- or under-estimate tax at different profit levels.
Super for sole traders
Unlike employees, sole traders don't receive compulsory super contributions. However, you can make voluntary concessional contributions and claim them as a tax deduction:
→Concessional super cap: $32,500/year for 2026-27, including employer and personal concessional contributions
→Concessional contributions are generally taxed at 15% inside the fund
→The calculator compares actual before-and-after income tax, LITO, small business offset and Medicare, then subtracts estimated fund contributions tax
→Lodge a "Notice of intent to claim" with your super fund before lodging your tax return
Once you know the tax number, plan what to do about it. Personalised year-round decisions ranked by deadline urgency — GST registration trigger, BAS quarterly, IAWO before 30 June, personal super contribution, FBT 31 Mar, structure switch, trust resolution.
Sole traders pay individual income tax on their business profits (income minus allowable deductions). Your business profit is added to any other personal income and taxed at marginal rates. There is no separate business tax rate — you use the standard individual tax brackets, starting with a tax-free threshold of $18,200 for 2026-27.
Do sole traders pay company tax?
No. A sole trader is not a separate company for income tax purposes. You report business income in your individual tax return, and the net profit is taxed at individual marginal rates rather than the company tax rate.
Does other income change sole trader tax?
Yes. A sole trader reports business income in the same individual tax return as salary, investment, rental and other assessable income. The calculator combines the other taxable income you enter with business profit before applying individual rates, Medicare, MLS and HELP settings.
What is the small business income tax offset?
Eligible sole traders with aggregated turnover below $5 million may receive an offset equal to 16% of the proportion of basic income tax attributable to net small business income, capped at $1,000 a year. The ATO calculates the final offset from the tax return. Some income, including excluded personal services income, is not eligible.
Do I need to register for GST as a sole trader?
You must register for GST if your annual GST turnover is $75,000 or more. If your turnover is below the threshold, registration is generally optional. Once registered, you account for GST on taxable sales and can claim eligible GST credits on business purchases.
What expenses can a sole trader claim as deductions?
Sole traders can claim deductions for expenses directly related to earning business income. Common deductions include: materials and supplies, motor vehicle expenses, home office costs, phone and internet (business portion), tools and equipment, professional fees, insurance premiums, and advertising costs. You must keep records for 5 years.
What are PAYG instalments for sole traders?
Pay As You Go (PAYG) instalments are quarterly prepayments of your expected annual income tax. The ATO calculates your instalment amount based on your most recent tax return. You pay quarterly via your Business Activity Statement (BAS). This prevents a large tax bill at the end of the financial year.
Can sole traders contribute to superannuation?
Sole traders aren't required to pay super for themselves. You can make personal contributions and may claim a deduction after giving your fund a valid notice of intent and receiving its acknowledgement. The 2026-27 concessional cap is $32,500 across employer and personal concessional contributions; concessional contributions are generally taxed at 15% in the fund.
How do I calculate my take-home pay as a sole trader?
Take-home pay = Gross income (ex-GST if registered) - Business expenses (ex-GST) - Income tax - Medicare levy - Any MLS or HELP repayments - Voluntary super contributions. Unlike employees, sole traders must set aside money for tax payments throughout the year.
Tax Accuracy & Sources
Reviewed: 17 July 2026 · Tax year: 2026-27
This calculator estimates 2026-27 sole trader tax including other taxable income, LITO, the small business income tax offset, Medicare levy, MLS, HELP repayments, GST mechanics, PAYG credits and deductible personal super. The planning amount is not an ATO PAYG notice amount. It does not classify detailed income components, test PSI or non-commercial loss rules, calculate aggregated turnover, model carry-forward super cap space, Division 293, business structure changes or state taxes.