Up to $700 Gone at $66,667
Low Income Tax Offset (LITO)
Up to $700 off your tax, in full if you earn $37,500 or less, tapering to nothing at $66,667. It is the simplest offset in the system and the one people most often fail to notice they are getting.
1 Enter your taxable income2 See your offset
Step 2 · your result
Your offset
$0
off the tax you owe
- Taxable income
- $0
- Which part of the taper
- -
- Taper applied
- -
- Cut out at
- $0
Bands from the Australian Taxation Office, checked 12 October 2026. General information only - not tax advice.
The three bands
| Taxable income | Your offset |
|---|---|
| $37,500 or less | $700 |
| $37,501 to $45,000 | $700 minus 5 cents for every $1 above $37,500 |
| $45,001 to $66,667 | $325 minus 1.5 cents for every $1 above $45,000 |
| Over $66,667 | Nil |
Two tapers, not one. The offset falls fast (5c per dollar) up to $45,000, then slowly (1.5c per dollar) after that. The second taper is four times gentler, which is why the offset is still worth something in the low $60,000s.
Why it can leave you with no tax to pay
The offset reduces your tax liability, so at low incomes it can wipe it out entirely. Combined with the $18,200 tax-free threshold, that means a single person can earn a fair amount above the threshold and still pay no income tax. It cannot, however, turn into a refund on its own - any unused offset is simply lost, and LITO is not refundable.
Frequently asked questions
How much is the low income tax offset?
The maximum is $700, and you get it in full if your taxable income is $37,500 or less. It tapers away completely at $66,667.
Is LITO a payment?
No. It reduces the tax you owe - it can take your tax down to zero but no further, and any unused part is not refunded. It is not a Centrelink payment and it is not separate income.
Do I have to claim it?
No. Your employer's withholding already takes it into account through the tax-free threshold, and the ATO applies it when you lodge. Most people never have to do anything.
What happens between $37,500 and $45,000?
You lose 5 cents of offset for every dollar above $37,500, which brings the offset from $700 down to $325 at $45,000.
And between $45,000 and $66,667?
The taper slows to 1.5 cents per dollar, taking the remaining $325 to zero at $66,667. That slower second taper is why the offset lingers further up the income scale than people expect.
Does LITO change with inflation?
It has been fixed at these amounts for years, unlike the tax brackets. That is worth knowing: the offset is worth less in real terms each year it stays unchanged.
Related
- Income tax calculator - see tax and offset together
- Take-home pay calculator
- Work-related deductions
- Medicare levy reduction