Sole Trader Tax Calculator
Tax on your business profit, and how much of each invoice to put aside for tax and GST.
On $80,000 of profit, expect about $15,120 of tax for the year, after the $1,000 small business offset. That's 15.1% of everything you invoice before GST. On a $5,500 invoice, put $1,256 aside: $500 of GST and $756 for tax.
| Business profit | $80,000 |
| Income tax | $14,520 |
| Small business offset | -$1,000 |
| Medicare levy | $1,600 |
| Tax on the business for the year | $15,120 |
An estimate for an Australian resident sole trader. It assumes you have private hospital cover (no Medicare levy surcharge) and doesn't include super contributions you might claim as a deduction.
Profit = business income - expenses. Tax is worked out on your other income plus the profit, at this year's resident rates with the low income tax offset, the Medicare levy and any HECS, and then the tax on your other income alone is taken off, so only the tax caused by the business is counted. The small business income tax offset is 16% of the income tax on the business share of your income, up to $1,000. Dividing the result by your business income gives the share of each invoice to keep for tax. If you're registered, one-eleventh of each invoice is GST, which goes to the ATO with your BAS.
Rates checked September 2026 against the ATO.
How sole traders are taxed
A sole trader doesn't pay company tax. Your business profit is added to any other income, such as a wage, and taxed at the normal individual rates, with the Medicare levy and any HECS/HELP repayments on top. You report it in the business schedule of your own tax return.
Your profit is what you invoice (before GST) less the business expenses you can claim. The tax-free threshold is $18,200, and in 2026-27 the rates are 15% up to $45,000, 30% to $135,000, 37% to $190,000 and 45% above that.
Unlike a wage, no tax is taken out of your business income as you earn it. That's why so many sole traders get a big bill in their first year: the tax is due in one go when you lodge.
The small business income tax offset
Sole traders with turnover under $5 million get the small business income tax offset. It's 16% of the income tax on your business profit, up to $1,000 a year. You don't apply for it: the ATO works it out from your tax return.
On $80,000 of profit, the income tax is $14,520 and 16% of that is $2,323, so you get the full $1,000. On $30,000 of profit the offset is about $283.
How much to put aside from each invoice
Divide the tax for the year by your business income before GST. That's the share of every invoice to keep for tax. If you're registered for GST, also keep one-eleventh of each GST-inclusive invoice for your BAS.
Example for 2026-27: $100,000 of invoices and $20,000 of expenses gives $80,000 of profit. Tax is $14,520, less the $1,000 offset, plus $1,600 Medicare levy: $15,120, or 15.1% of what you invoice. On a $5,500 invoice including GST, put aside $500 of GST and $756 for tax, $1,256 in all.
The easiest way to do it is a separate bank account for tax. Move the set-aside amount across each time a customer pays, and pay your BAS and tax bill from it. A little extra in there is better than coming up short.
If you have a job as well
Enter your wage as other income. The calculator works out the tax on your wage and business profit together, then takes away the tax on your wage alone, because your employer already withholds that. What's left is the extra tax caused by the business.
Business income sits on top of your wage, so it's taxed at your highest rate. With a $60,000 wage, every extra dollar of profit is taxed at 30% plus 2% Medicare, which is why the share to put aside is usually higher for a side business than for a full-time one.
PAYG instalments and BAS
After you lodge a return with business income, the ATO will usually put you into PAYG instalments: you pay part of next year's tax each quarter with your BAS, instead of one large bill after the year ends. The money you've put aside covers these payments.
If you're registered for GST, quarterly BAS is due on 28 October, 28 February, 28 April and 28 July, or later if you lodge through a registered tax or BAS agent.
What this calculator leaves out
It's an estimate for an Australian resident. It assumes you have private hospital cover, so there's no Medicare levy surcharge, and it doesn't include personal super contributions you claim as a deduction, which lower your taxable income. It also doesn't cover losses, partnerships, trusts or companies. For those, and to check the numbers for your own business, talk to a registered tax agent.
Frequently asked questions
The same individual rates as an employee, on profit rather than salary. On $80,000 of profit in 2026-27 it's about $15,120 with the Medicare levy and the $1,000 small business offset.
It depends on your profit and other income. Sole traders earning $50,000 to $100,000 often need somewhere around 10% to 20% of what they invoice before GST, plus all the GST if they're registered. The calculator works out your own figure.
On profit: what you earn less the business expenses you can claim. GST you collect isn't income either, because it belongs to the ATO.
Yes. The first $18,200 of your total taxable income is tax-free, the same as for an employee. If you also have a job, your employer usually applies the threshold to your wage.
A tax offset for sole traders and other unincorporated businesses with turnover under $5 million. It's 16% of the income tax on your business profit, up to $1,000 a year, worked out by the ATO when you lodge.
In your first year, when you lodge your tax return. After that, usually through quarterly PAYG instalments during the year, with any balance settled when you lodge.