ABN tax calculator for contractors
This ABN tax calculator shows how much tax a contractor or sole trader should set aside from each invoice. Unlike wages, ABN income has no tax withheld, so you pay it all when you lodge your return. Enter your expected ABN income, business expenses and any wage income, and the calculator works out your tax and Medicare levy for 2026-27 and the percentage to put aside.
Updated 12 November 2026 · Uses 2026-27 figures
Work out how much tax to set aside
Enter your expected ABN income for the year, excluding GST.
General information only, not financial, tax or legal advice. Results are estimates based on 2026-27 figures and the assumptions shown. Check your award, agreement or a qualified adviser for your situation.
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Find workHow to use the ABN tax calculator
- Enter your expected ABN income for the year, excluding any GST you charge.
- Enter your business expenses, such as tools, vehicle costs, insurance and phone.
- Enter any wage income from other jobs, so the tax on your ABN income is worked out at the right rate.
- Enter super you contribute for yourself and plan to claim as a deduction.
- Read the percentage to set aside from each invoice and the tax per week.
How tax works for ABN income
A sole trader pays tax on business profit at the same individual tax rates as an employee. The difference is that nobody withholds tax from your invoices, so you need to put money aside yourself and pay it when your return is assessed.
| Taxable income | Tax on this income (2026-27) |
|---|---|
| $0 to $18,200 | Nil |
| $18,201 to $45,000 | 15c for each $1 over $18,200 |
| $45,001 to $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 to $190,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,370 plus 45c for each $1 over $190,000 |
The calculator works out tax on your total taxable income (ABN profit plus any wages, minus deductible super), then takes off the tax that would apply to your wages alone. What's left is the tax caused by your ABN income. It adds the 2% Medicare levy and applies the low income tax offset where it applies.
Worked example: a full-time contractor
A contractor expects $90,000 of ABN income (ex GST), with $8,000 of expenses. They contribute $9,000 to their own super and claim a deduction. They have no other job.
Taxable income is $73,000. Tax and Medicare levy come to about $13,880 for the year.
That's 15.4% of each invoice, or about $267 a week, to set aside.
Many contractors set aside a round 25% to 30% to cover GST and a buffer. If you're registered for GST, the GST you collect is not your money. Keep it separate and pay it with your business activity statement.
Do I need to register for GST?
You must register for GST once your business turnover reaches $75,000 a year, or is expected to. Taxi and rideshare drivers must register regardless of turnover. Once registered, you add 10% GST to your invoices and lodge business activity statements. Use the GST calculator to work out GST on an invoice.
PAYG instalments
After your first tax return with business income, the ATO may put you into PAYG instalments, which means paying part of next year's tax each quarter. This helps avoid one large bill, but it can mean paying tax for two years in a short space of time in your first year of contracting.
ABN or employee: which pays more?
A contractor's hourly rate has to cover super, leave, insurance, quiet periods and admin that an employer would otherwise pay. A rate that looks high often isn't once these costs are counted. The contractor rate calculator converts a salary into the day rate needed to match it.
Labelling a worker as a contractor doesn't make them one. The Fair Work Act looks at the real working relationship. If you're told to get an ABN for work that looks like employment, you may be entitled to wages, super and leave. Working as a TQN Personnel employee on labour hire means tax and super are handled for you each pay. Register for work here.
Frequently asked questions
How much tax do I pay on ABN income?
ABN income is taxed at the same individual rates as wages, on your profit after business expenses. For 2026-27 that's nil to $18,200, then 15%, 30%, 37% and 45%, plus the 2% Medicare levy. The calculator shows your figure and the share of each invoice to set aside.
How much should I put aside for tax on an ABN?
It depends on your income. On $73,000 of taxable income, tax and Medicare are about 15% of $90,000 of invoices. Many contractors put aside 25% to 30% to cover GST and a safety margin, then adjust once they know their real figures.
How do I pay tax as a sole trader?
You report business income and expenses in your individual tax return and pay the tax when it's assessed. After your first year, the ATO may ask you to pay PAYG instalments quarterly. If you're registered for GST, you also lodge business activity statements.
Do I need an ABN as a sole trader?
Yes. You need an ABN to run a business as a sole trader and to quote it on invoices. Applying through the Australian Business Register is free.
What can a sole trader claim on tax?
Business expenses directly related to earning your income, such as tools, equipment, vehicle costs for business travel, insurance, phone and internet use, accounting fees and deductible personal super contributions. Keep receipts for every claim.
When do I need to register for GST?
When your business turnover reaches or is expected to reach $75,000 in a year. You have 21 days to register once you reach the threshold. Taxi and rideshare drivers must register from the start.
Related calculators
Related guides
Contractor vs employeeSources and assumptions
- ATO: Tax rates for Australian residents
- ATO: Registering for GST
- Australian Business Register
- ATO: Medicare levy reduction for low-income earners
General information only, not financial, tax or legal advice. Results are estimates based on 2026-27 figures and the assumptions shown. Check your award, agreement or a qualified adviser for your situation.