Can a Pay Rise Leave You Worse Off? Tax, HELP and MLS

Enter your current annual cash salary and the full-year pay rise. Leave employer super out of both figures. The result shows what changes each year, month and fortnight after income tax, Medicare, HELP and MLS.

What the default result is made of

The calculator starts with a single employee moving from $102,000 to $107,000. They have a HELP debt and no appropriate hospital cover. Here is where the $5,000 pay rise goes:

• Income tax increases by $1,500.
• The ordinary Medicare levy increases by $100.
• The compulsory HELP repayment increases by $750.
• Crossing the MLS threshold adds $1,060.

That leaves $1,590 of extra annual take-home pay. It is about $133 a month or $61 a fortnight. Keeping only 31.8% of a pay rise is a harsh result. The MLS crossing is what makes this example unusual.

Australia taxes successive slices of income at different rates. When part of a pay rise reaches a higher bracket, only that part attracts the higher rate. The income below the boundary keeps its earlier treatment.

Suppose taxable income rises from $134,000 to $139,000. The first $1,000 takes income to the $135,000 boundary and is taxed at 30%. The remaining $4,000 is taxed at 37%. The ordinary 2% Medicare levy applies as well. Take-home pay still rises.

The useful question is how much of this pay rise you will keep. Your answer can include a tax-bracket crossing, HELP and MLS at the same time, which is why the before-and-after calculation matters.

HELP repayments have used marginal bands since 2025–26. In 2026–27 you pay nothing until repayment income reaches $69,528. Above that point, the first band takes 15 cents from each additional dollar instead of applying 15% to your whole income.

If repayment income moves from $69,528 to $70,528, the compulsory repayment is about $150. A pay rise can therefore start or increase HELP repayments. The HELP threshold itself will not leave you with less take-home pay.

Repayment income starts with taxable income and adds amounts such as reportable fringe benefits, net investment losses and reportable super contributions. Salary sacrifice into super generally does not move you below a HELP threshold because the contribution is added back. Your compulsory repayment is capped if the remaining HELP balance is smaller.

The Medicare Levy Surcharge is separate from the ordinary 2% Medicare levy. It can apply when your income passes the relevant threshold and you do not have appropriate private patient hospital cover. Unlike an income-tax bracket, the MLS rate can apply to your whole relevant income once you cross the line.

Couples and families use combined income. Their 2026–27 thresholds start at $210,000, with an extra $1,500 for each dependent child after the first.

Your MLS income may not match your salary. It starts with taxable income and can add reportable super contributions, fringe benefits and net investment losses. In the simple salary-only example above, the automatic $1,000 work-related deduction leaves a $106,000 salary at the $105,000 threshold. Other income adjustments can move the crossing point.

Each row starts at a different salary and applies the same $5,000 full-year pay rise. The rows around $68,000 show HELP starting. The $102,000row crosses the first MLS threshold. The $134,000 row crosses an income-tax bracket.

• Check whether the offer includes employer super. A package of $110,000 including super is different from $110,000 cash salary plus super.
• Use the income you will earn before 30 June. A pay rise that begins halfway through the financial year has only a partial effect on that year's tax, HELP and MLS.
• Count what changes outside the payslip. Extra super, leave and flexibility add value. Longer hours, commuting and childcare can absorb part of the increase.