PAYG Withholding in 2026: Fortnightly Tax Tables, How to Calculate It and When to Pay

Hiring your first employee in Australia means taking on a new job: PAYG withholding. Every payday you work out the tax to take from each worker's pay, report it to the ATO and pay it over. This guide is for small business owners, bookkeepers and anyone checking a payslip. You'll learn who must withhold, how to register, what changed in the 2026-27 fortnightly tax tables, how to calculate PAYG by hand with the ATO's own formula, and when to report and pay.

Quick answer

PAYG withholding is the income tax an employer deducts from wages (and some other payments) and sends to the ATO. Register before your first pay run, collect a TFN declaration from each worker, use the ATO tax tables or Schedule 1 formulas to work out the amount, report it every payday through Single Touch Payroll, and pay it with your activity statement. New tables apply from 1 July 2026.

• Example: A$2,400 a fortnight, tax-free threshold claimed → A$404 withheld in 2026-27 (A$416 in 2025-26)

• No TFN declaration after 14 days → withhold 47%

• Withhold A$25,000 or less a year → pay quarterly; more → monthly

• Super: 12% paid within 7 business days of payday under Payday Super

What PAYG withholding is and who must do it

Under pay as you go withholding, you act as the ATO's collector. The tax you take out isn't your money — it's credited to the worker and shows on their income statement at year-end.

business.gov.au says you generally need to withhold from payments to:

• employees, including casuals and part-timers;
• company directors (directors' fees);
• businesses that don't quote an ABN when they invoice you — at 47%;
• contractors who ask for a voluntary agreement to have tax withheld.

The ATO's fortnightly table also covers paid parental leave, office holders, labour-hire workers, religious practitioners and some compensation payments. Working holiday makers use a separate table (Schedule 15).

Not wages: if you're a sole trader or partner, money you take out of the business for yourself is a drawing, not a wage — don't withhold from it. You manage your own tax through PAYG instalments instead (see the comparison below).

Registering for PAYG withholding

You must register before the first payment you need to withhold from. If your business has an active ABN, register through the ATO's Online services for business, or ask your registered tax or BAS agent. Brand-new businesses can tick PAYG withholding in the government's Business Registration Service when they apply for an ABN — our ABN registration guide walks through it, and you'll also need a registered business name if you trade under one.

Getting payroll-ready (2026)

1. 1

   Register for PAYG withholding

   Through ATO Online services for business, your BAS agent, or the Business Registration Service at the same time as your ABN.

   business.gov.au — register for PAYG withholding
2. 2

   Get STP-enabled payroll software

   Single Touch Payroll is mandatory for all employers. Choose software that's on the 2026-27 tables and supports STP Phase 2.

3. 3

   Collect a TFN declaration from each new worker

   It tells you whether they claim the tax-free threshold, are a resident and have a study loan. Without it after 14 days, withhold 47%.

4. 4

   Set up super

   Collect the employee's choice of fund and set up SuperStream payments — from 1 July 2026 super is due with each pay.

5. 5

   Run your first pay

   Calculate gross pay, withholding and super, pay the employee and give them a payslip.

   Tip: Generate compliant payslips with our salary slip generator.

PAYG tax tables for 2025-26 and 2026-27

The ATO publishes weekly, fortnightly and monthly tax tables plus Schedule 1, the statement of formulas payroll software uses. Tables for 2025-26 were the ones in force from 1 July 2024 to 30 June 2026.

From 1 July 2026 everything changed. The ATO updated all 15 withholding schedules and 12 tax tables because the Treasury Laws Amendment (More Cost of Living Relief) Act 2025 cut the rate on income between A$18,201 and A$45,000 to 15% for 2026-27, and Medicare levy low-income thresholds rose. If a payroll file or PDF says "1 July 2024 to 30 June 2026", it's out of date.

Fortnightly withholding at a glance

We applied the ATO's Schedule 1 coefficients to common fortnightly wages for a resident with no study loan. "Scale 2" means the tax-free threshold is claimed (the usual case for a main job); "scale 1" means it isn't (typically a second job).

Nothing is withheld under scale 2 when weekly-equivalent earnings are under A$362 a week — roughly A$724 a fortnight. As a check, our method reproduces the ATO's own example: A$989 a fortnight gives A$40 with the threshold claimed and A$176 without.

How to calculate PAYG withholding: a worked fortnightly example

You can use the ATO's fortnightly tax table (NAT 1006) and its Withholding lookup tool, the ATO tax withheld calculator, or the Schedule 1 formula. Here's the formula done by hand, so you can check any payslip.

Sam works in a Brisbane café, earns A$2,400.60 gross for the fortnight, has claimed the tax-free threshold and has no study loan.

Calculate PAYG on A$2,400.60 a fortnight (2026-27)

1. 1

   Drop the cents and convert to weekly

   Fortnightly earnings A$2,400 ÷ 2 = A$1,200. Ignore cents, then add 99 cents: x = 1,200.99.

2. 2

   Find the band in Schedule 1 (scale 2)

   x is under A$1,282, so a = 0.3227 and b = 185.1935.

3. 3

   Apply y = ax − b

   0.3227 × 1,200.99 − 185.1935 = 202.37.

4. 4

   Round to the nearest dollar

   Weekly withholding = A$202. Round directly — no preliminary rounding to cents.

5. 5

   Convert back to fortnightly

   A$202 × 2 = A$404 withheld. Sam's net pay is A$2,400.60 − A$404 = A$1,996.60.

   Tip: Then subtract any tax offset or Medicare adjustment, and add study-loan withholding if Sam had one.

Under the 2025-26 coefficients (b = 180.0385), the same pay gave A$208 weekly, or A$416 — so the 2026-27 tables leave Sam about A$12 a fortnight better off, roughly A$312 over 26 pays.

If Sam's café job were a second job and he hadn't claimed the threshold (scale 1: a = 0.3200, b = 71.6508 for this band), withholding would be A$626.

Adjustments the table doesn't do for you

• Study and training loans (HELP, VSL, etc.): add the amount from the study-loan fortnightly table.
• Tax offsets: reduce fortnightly withholding by 3.8% of the annual offset claimed on the withholding declaration.
• Medicare levy exemption or adjustment: use the "no and half Medicare levy" or Medicare adjustment tables.
• Allowances, bonuses and leave: add regular allowances to the pay; bonuses and back pay use Schedule 5.
• 27 pays in a year: the tables assume 26 fortnights. When there are 27, employees earning A$1,700 to A$5,199 a fortnight can ask you to withhold an extra A$12 each pay.

Reporting through Single Touch Payroll

Every employer must report through Single Touch Payroll (STP). Each time you run payroll, your STP-enabled software sends each employee's gross pay, PAYG withheld and super information to the ATO. Under STP Phase 2 it also sends more detail, such as income types and tax treatment codes.

STP replaces the old year-end paperwork: if you report and finalise through STP, you don't issue payment summaries or lodge a PAYG withholding annual report. The ATO also pre-fills W1 (total wages) and W2 (amounts withheld) on your activity statement from your STP data — check them before you lodge.

When to pay PAYG withholding: due dates

How often you pay depends on how much you withhold in a year:

Small withholders' quarterly due dates are 28 October (July–September), 28 February (October–December, which already includes an extension), 28 April (January–March) and 28 July (April–June).

Lodging online or through a registered agent can give extra time on some quarters. If a due date falls on a weekend or public holiday, you have until the next business day. Late payment attracts the general interest charge.

Payday Super from 1 July 2026. Super is no longer quarterly: for earnings paid from 1 July 2026, the 12% contribution must reach the employee's fund within 7 business days of payday. Budget for PAYG and super together each pay run.

PAYG withholding vs PAYG instalments

Two different PAYG systems

	PAYG withholding	PAYG instalments
Whose tax?	Your workers' (and no-ABN suppliers')	Your own business's income tax
Based on	Each payment you make	Your business and investment income
How you enter	Register before your first payment	ATO enrols you automatically above its threshold, or you opt in
How often	Quarterly, monthly or within days of payday	Usually quarterly
Reported on	STP each payday plus activity statement	Activity statement
Year-end	STP finalisation	Credited against your income tax return

Whose tax?

PAYG withholding

Your workers' (and no-ABN suppliers')

PAYG instalments

Your own business's income tax

Based on

PAYG withholding

Each payment you make

PAYG instalments

Your business and investment income

How you enter

PAYG withholding

Register before your first payment

PAYG instalments

ATO enrols you automatically above its threshold, or you opt in

How often

PAYG withholding

Quarterly, monthly or within days of payday

PAYG instalments

Usually quarterly

Reported on

PAYG withholding

STP each payday plus activity statement

PAYG instalments

Activity statement

Year-end

PAYG withholding

STP finalisation

PAYG instalments

Credited against your income tax return

A sole trader with two employees will often do both: withhold from staff wages and pay instalments on their own profit.

Common PAYG mistakes

• Using last year's tables. Anything dated "to 30 June 2026" over-withholds for most staff — update your software.
• Treating owner drawings as wages. Sole traders and partners don't withhold from their own drawings.
• Missing the TFN declaration. After 14 days without one, the rate jumps to 47%.
• Paying ABN-less suppliers in full. If a business supplier doesn't quote an ABN, you generally must withhold 47%.
• Forgetting STP finalisation. Employees can't lodge their returns smoothly until you finalise.

Official links

• ATO — tax tables (2026-27)
• ATO — fortnightly tax table (NAT 1006)Includes the Withholding lookup tool
• ATO — Schedule 1 statement of formulas
• ATO — paying and reporting PAYG withholding
• ATO — Single Touch Payroll
• ATO — Payday Super deadlines
• business.gov.au — register for PAYG withholding
• business.gov.au — PAYG instalments

What to do next

Register for PAYG withholding before your first pay run, make sure your payroll software is on the 2026-27 tables, and diarise your BAS due dates. Produce clear payslips with our salary slip generator, and if you're registered for GST, price your sales with the Australia GST calculator.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is PAYG withholding?

Pay as you go (PAYG) withholding is the tax an employer or other payer takes out of payments such as wages, directors' fees and payments to suppliers who don't quote an ABN, and sends to the ATO. It counts towards the worker's income tax for the year, so they don't face one large bill when they lodge their return.

How do I calculate PAYG withholding on a fortnightly wage?

Ignore cents, then either look up the amount in the ATO's fortnightly tax table or use the Schedule 1 formula: halve the fortnightly earnings, drop cents, add 99 cents, apply y = ax − b for the right band, round to the nearest dollar and double it. On A$2,400 a fortnight with the tax-free threshold claimed, 2026-27 withholding is A$404.

Did the PAYG tax tables change on 1 July 2026?

Yes. The ATO updated all 15 withholding schedules and 12 tax tables from 1 July 2026 to reflect the tax cut in the Treasury Laws Amendment (More Cost of Living Relief) Act 2025, which lowered the rate on income from A$18,201 to A$45,000 to 15%, plus higher Medicare levy low-income thresholds. Update your payroll software to the 2026-27 tables.

When do I pay PAYG withholding to the ATO?

It depends on how much you withhold a year. Small withholders (A$25,000 or less) report and pay quarterly with their BAS — 28 October, 28 February, 28 April and 28 July. Medium withholders pay monthly by the 21st of the next month. Large withholders (over A$1 million) pay electronically within six to eight days of each payday.

What's the difference between PAYG withholding and PAYG instalments?

PAYG withholding is tax you take from other people's pay and remit for them. PAYG instalments are prepayments of your own business's income tax, usually quarterly, based on your business and investment income. A sole trader with staff can be in both systems at once; both are reported on the activity statement.

What if an employee doesn't give me their TFN?

If a new employee hasn't provided a tax file number declaration within 14 days and hasn't said they've applied for a TFN, you must withhold 47% from resident payees (45% for foreign residents), ignoring cents. Report it through Single Touch Payroll with the relevant tax treatment code, or send the ATO a TFN declaration with the details you have.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Tax tables (overview and July 2026 updates) — Australian Taxation Office · accessed 7 October 2026
2. 2.Fortnightly tax table (NAT 1006) — from 1 July 2026 — Australian Taxation Office · accessed 7 October 2026
3. 3.Schedule 1 — coefficients for weekly payments (from 1 July 2026) — Australian Taxation Office · accessed 7 October 2026
4. 4.Schedule 1 — working out the weekly earnings / using a formula — Australian Taxation Office · accessed 7 October 2026
5. 5.Schedule 1 coefficients — 1 July 2024 to 30 June 2026 — Australian Taxation Office · accessed 7 October 2026
6. 6.Paying and reporting PAYG withholding amounts — Australian Taxation Office · accessed 7 October 2026
7. 7.Due dates for lodging and paying your BAS — Australian Taxation Office · accessed 7 October 2026
8. 8.What STP is — Australian Taxation Office · accessed 7 October 2026
9. 9.STP and activity statements — Australian Taxation Office · accessed 7 October 2026
10. 10.Payment deadlines for Payday Super — Australian Taxation Office · accessed 7 October 2026
11. 11.Super guarantee percentage — Australian Taxation Office · accessed 7 October 2026
12. 12.Register for pay as you go (PAYG) withholding — business.gov.au · accessed 7 October 2026
13. 13.Pay as you go (PAYG) instalments — business.gov.au · accessed 7 October 2026