The low income tax offset (LITO)
Updated 13 November 2026.
The low income tax offset (LITO) reduces the income tax of Australian residents on lower incomes. You don't apply for it: the ATO works it out when you lodge your tax return.
How much it's worth
- Taxable income up to $37,500: the full $700.
- $37,500 to $45,000: $700, reduced by 5 cents for each dollar over $37,500.
- $45,000 to $66,667: $325, reduced by 1.5 cents for each dollar over $45,000.
- $66,667 or more: nothing.
| Taxable income | Offset in 2026–27 |
|---|---|
| $30,000 | $700.00 |
| $37,500 | $700.00 |
| $40,000 | $575.00 |
| $45,000 | $325.00 |
| $50,000 | $250.00 |
| $55,000 | $175.00 |
| $60,000 | $100.00 |
| $66,000 | $10.00 |
What it can and can't do
- It reduces income tax, but not below zero: any unused amount isn't paid out as a refund.
- It doesn't reduce the Medicare levy.
- Foreign residents for tax can't get it.
Is it in my pay already?
Yes, if you claim the tax-free threshold: the ATO's withholding formulas build the offset into the tax taken from each pay. That's why it doesn't usually produce a big refund on its own.
The older low and middle income tax offset (LMITO) ended after the 2021–22 year. See the full tax rates for 2026–27.