Sole Trader Tax on $85,000 in Australia (2026-27)
Total tax on $85,000 of net profit
$16,720
- Income tax
- $16,020
- Small business offset
- -$1,000
- Medicare levy
- $1,700
- Take-home
- $68,280
Effective rate 19.7% of profit.
At $85,000 you are past the GST registration threshold and squarely in the 30% bracket.
Eighty-five thousand dollars of net profit is taxed at nil on the first portion, the lower rate to $45,000, and thirty cents in the dollar on everything above that, plus the two per cent Medicare levy on the whole amount. If your turnover reached this level you are required to be registered for GST, which means quarterly or monthly Business Activity Statements on top of your annual return. The practical consequence of the BAS cycle is that money arriving in your account is not all yours - a portion is GST you are holding for the ATO, separate again from the income tax set out below.
How the $16,720 is worked out
| Bracket | Rate | Your income taxed here |
|---|---|---|
| $0 - $18,200 | Nil | $0 |
| $18,201 - $45,000 | 15c per $1 | $26,800 |
| $45,001 - $135,000 | 30c per $1 | $40,000 |
The Low Income Tax Offset does not apply at $85,000 - it reaches nil at $66,667. The small business income tax offset then takes $1,000 off: 16% of the income tax, capped at $1,000, for a business with turnover under $5 million whose income is not personal services income. The Medicare levy of $1,700 is charged on your taxable income at 2%.
Your next step
- Put aside $4,180 a quarter for income tax and MedicareTax is usually not withheld from business income, so set it aside as you are paid. Add GST if you are registered: work out both together.
- Quarterly BAS is due 28 October, 28 February, 28 April, 28 JulyStandard dates if you lodge yourself. Lodging online or through a registered agent may give you extra time; your own date is shown on your BAS. All BAS due datesDownloads a calendar file with the next four dates. No sign-up; the file is made in your browser and your calendar is never shared with us.
- GST registration is required once turnover reaches $75,000The test is on turnover, not profit. Some platform work may also need registration. Work out the GST on your sales.
This page assumes $85,000 is your net profit - business income after deductible expenses - with no HECS-HELP debt and no other income. Those change the answer. Use the sole trader tax calculator for your own figures, or the HECS-HELP calculator if you have a study loan.
Questions about tax on $85,000
How much tax does a sole trader pay on $85,000?
A sole trader with $85,000 of net business profit pays $16,720 in the 2026-27 financial year - $16,020 of income tax, less the $1,000 small business tax offset, plus $1,700 Medicare levy. That leaves $68,280 take-home, an effective tax rate of 19.7%.
Is $85,000 taxed differently for a sole trader than for an employee?
A sole trader is taxed at the same resident individual rates as an employee, on profit (business income after deductible expenses) instead of salary, and no tax is withheld along the way, so you set it aside yourself. One real difference: a sole trader with turnover under $5 million gets the small business income tax offset, 16% of the income tax on business profit up to $1,000 a year ($1,000 at $85,000). An employee does not. Personal services income, such as most single-client contracting, does not count for the offset.
Do I have to register for GST on $85,000?
If your gross turnover reached $75,000 or more, yes - GST registration is compulsory and you lodge a Business Activity Statement. Note the test is on turnover, not the profit figure on this page.
What should I set aside from $85,000?
Setting aside $4,180 each quarter covers the $16,720 total. This page assumes no HECS-HELP debt and no deductible expenses beyond those already taken out to reach $85,000 of profit - both change the answer, so use the calculator for your own figures.
Tax on other income levels
Written by Rob, founder of AusCalc
Australian small business owner. Checked against current ATO published rates. Updated September 2026. About AusCalc
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