Redundancy Tax Calculator Australia 2026-27

Estimate PAYG withholding on redundancy and employment termination payments. Separate the genuine-redundancy tax-free amount, applicable cap and estimated net payment.

Need the rule explanation first? Read the 2026-27 genuine redundancy vs ETP summary, then use the calculator below.

Built for redundancy specifically: the tax-free component, ETP cap and NES payout bands on this page are all sized to a genuine-redundancy scenario. Working through an ETP that isn't a redundancy — a golden handshake, an invalidity payment, or a death benefit unrelated to redundancy? Use the ETP Calculator instead.

01 —INPUTS

Tax year

Sets the ETP cap, tax-free base and per-service-year amounts.

Eligible ETP / Redundancy Amount

Exclude salary, super and unused annual or long-service leave; they use separate rules.

Payment Type

Involuntary termination due to redundancy

Completed Years of Service

Full completed years only (part years excluded)

Date of Birth

Determines whether you reach preservation age by 30 June 2027.

Choose genuine redundancy only if the job was abolished and you were below Age Pension age (or an earlier mandatory retirement age) when dismissed.

2026-27 Schedule 11 withholding rates and ATO limits.

02 —RESULTS

Awaiting input

Enter your redundancy or ETP details to calculate tax

Next best steps

DoorDash tax and take-homeEstimate delivery profit, extra tax and after-tax hourly earnings Estimate GST creditsApportion GST on eligible business purchases for BAS label 1B Check PSI rulesResults test, 80% rule and PSB pathways Document generatorsInvoices, payslips, quotes and more

Edit inputs ↑

Genuine redundancy vs normal termination

Genuine redundancy

→Tax-free amount: $13,598 + $6,801 per completed year

→Eligible excess uses the ETP cap

→Employee must be below Age Pension age or an earlier mandatory retirement age at dismissal

Normal termination (not genuine)

→No genuine-redundancy tax-free limit

→Smaller of ETP and whole-of-income caps generally applies

→Within-cap withholding is 32% or 17%; above-cap withholding is 47%

What makes a redundancy non-genuine

Everything above turns on one word: genuine. Only a genuine redundancy gets the tax-free limit, so if the payment fails that test the whole $13,598 base and every year of service with it are gone, and the full payment is taxed as an ordinary ETP. The ATO lists five circumstances that make a redundancy non-genuine:

→Your dismissal is because you reach normal retirement age

→You are age pension age or older on the day of dismissal

→You are leaving voluntarily

→You are leaving on termination of your contract

→Your dismissal is for disciplinary or inefficiency reasons

Volunteering for redundancy is not the same as resigning

That third condition is the one people get wrong, and it is expensive. "Leaving voluntarily" means a termination you initiate — a resignation. It does not mean putting your hand up when your employer offers redundancy packages. Taxation Ruling TR 2009/2 addresses this directly at paragraph 253:

In circumstances where an employee volunteers to accept a redundancy package, there may still be a dismissal. This will occur where the decision to terminate employment is still ultimately that of the employer. The termination of employment is a dismissal here because the employer initiates the process and has the final say in whose employment is to be terminated.

So if your employer decided the roles would go, ran the process and chose who left, the payment can still be a genuine redundancy even though you volunteered. The same ruling runs the mirror case at paragraph 22: resigning under an explicit or implicit threat of dismissal is a constructive dismissal, and that counts as a dismissal too. At 10 completed years this distinction is worth $81,608 of tax-free component, so it is worth settling before you assume a voluntary package is taxed as an ordinary ETP.

A genuine redundancy payment may include

→Payment in lieu of notice

→Severance pay — a number of weeks' pay for each year of service

→A gratuity or 'golden handshake'

You must exclude from it

→Salary, wages or allowances owing for work done or leave already taken

→Unused annual leave or leave loading paid on termination

→Unused long service leave paid on termination under a formal arrangement

→Payments made in lieu of superannuation benefits

This split is the usual reason an employer’s gross payout figure and a redundancy tax estimate disagree: unused annual and long service leave are taxed under Schedule 7, not as part of the redundancy at all. Strip them out before comparing.

How redundancy payments are taxed in Australia

When you receive a redundancy payment, it may have two parts: a tax-free component (for genuine redundancies) and a taxable component that is treated as an Employment Termination Payment (ETP). The tax-free portion is only available when the redundancy is "genuine" — meaning the employer no longer needs anyone to do the job.

Any amount above the tax-free limit is generally treated as the taxable component of an excluded life benefit ETP. That means the concessional treatment is measured against the ETP cap.

Genuine redundancy tax-free formula

Tax-free = $13,598 + ($6,801 × completed years of service)

These are the 2026-27 indexed amounts. Only completed full years count.

Redundancy pay vs redundancy tax

First how much, then how much tax

"Redundancy calculator" covers two different questions, decided by two different bodies of law. How much you are paid comes from the Fair Work Act's National Employment Standards (or a more generous award, agreement or contract). The NES sits in federal law, so for employees covered by it the same scale applies in every state and territory — there is no separate NSW or Victorian redundancy table to go and find. How much of it you keep comes from the tax law on this page — the genuine redundancy tax-free limit, then Schedule 11 on the excess. Work them out in that order; the tax side needs the payout as its input.

Continuous service	NES redundancy pay	Tax-free limit at that service
Under 1 year	Nil	$13,598
1 year – under 2 years	4 weeks	$20,399
2 years – under 3 years	6 weeks	$27,200
3 years – under 4 years	7 weeks	$34,001
4 years – under 5 years	8 weeks	$40,802
5 years – under 6 years	10 weeks	$47,603
6 years – under 7 years	11 weeks	$54,404
7 years – under 8 years	13 weeks	$61,205
8 years – under 9 years	14 weeks	$68,006
9 years – under 10 years	16 weeks	$74,807
10 years or more	12 weeks	$81,608

Read the last column as the tax-free ceiling at the bottom of each service band — it keeps growing by $6,801 for every further completed year, while the NES weeks step down at 10 years. That is why long-service redundancies are usually entirely tax free on the severance component: the tax-free limit outgrows the statutory payout well before the weeks peak.

Two things the NES scale does not cover and the tax side treats separately: notice of termination (Fair Work Act s 117, or payment in lieu) and unused annual and long service leave, which is taxed under Schedule 7 rather than as an ETP. Work out the payout in the redundancy payout calculator , price the leave in the lump sum tax calculator , and bring the severance figure back here.

Tax-free amount by years of service

Years of Service	Tax-Free Amount
1 year	$20,399
5 years	$47,603
10 years	$81,608
15 years	$115,613
20 years	$149,618
25 years	$183,623
30 years	$217,628

ETP caps and PAYG withholding rates

The taxable component of a genuine redundancy payment is treated as an excluded life benefit ETP. For 2026-27, the main cap is the ETP cap of $270,000. The whole-of-income cap of $180,000 applies to non-excluded life benefit ETPs and is reduced by other taxable payments in the income year.

Component	Below preservation age	At/above preservation age
Tax-free (genuine redundancy)	0%	0%
Within ETP cap	32%	17%
Above ETP cap	47%	47%

Preservation age table

Your preservation age determines the maximum within-cap withholding rate. Schedule 11 compares it with your age on 30 June of the income year in which the payment is received:

Date of birth	Preservation age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1963	58
1 July 1963 – 30 June 1964	59
From 1 July 1964	60

Worked example: genuine redundancy

Scenario

Sarah, age 53 at 30 June 2027 (born 15 March 1974, preservation age 60), receives a $150,000 genuine redundancy payment after 12 completed years of service. Her other taxable income this year is $40,000.

Step 1 — Tax-free $13,598 + ($6,801 × 12) = $95,210

Step 2 — Taxable $150,000 − $95,210 = $54,790

Step 3 — ETP cap Excluded ETP measured against the $270,000 cap — $54,790 fully within cap

Step 4 — PAYG withholding $54,790 × 32% = $17,533 after Schedule 11 rounding

Result Estimated net after withholding: $132,467

Important: This is a PAYG withholding estimate. Final tax can differ at assessment, and most ETPs must be received within 12 months of termination.

What's included / not included

Included

→Genuine redundancy tax-free component

→Schedule 11 rates based on preservation age

→ETP cap & whole-of-income cap analysis

→Death benefit ETP (dependants/non-dependants)

→Age at 30 June from date of birth

→Estimated PAYG withholding and net payment

Not included

→Unused annual / long service leave (separate rules)

→Tax offsets such as LITO

→Multiple ETPs in one year

→Invalidity segment of ETP

→Pre-July 1983 service component

→Non-resident tax rates

→Early retirement scheme payments

What happens next?

Non-redundancy ETP?

Golden handshakes, invalidity and death benefit ETPs have their own caps.

ETP calculator →

Got unused annual leave?

Calculate tax on your unused annual leave and long service leave payout.

Calculate leave tax →

Reinvesting your payout?

See how your redundancy payout could grow in super or investments.

Plan retirement →

Starting as a sole trader?

Many redundancy recipients go freelance. Estimate your ABN tax.

Sole trader tax →

What about your HELP debt?

Lump sum payments can trigger HELP repayments. Check your threshold.

Check HELP impact →

Need the payout amount first? Calculate your NES redundancy weeks and notice pay .

FAQ

What is a genuine redundancy payment?

A genuine redundancy payment is made to an employee whose position has been made genuinely redundant. It includes a tax-free component calculated as $13,598 plus $6,801 for each completed year of service (2026-27 rates). To qualify, the dismissal must be because the employer no longer requires the job to be done by anyone, not because of poor performance.

How much of my redundancy is tax-free?

For 2026-27, the tax-free amount is $13,598 plus $6,801 for each completed year of service. For example, with 10 completed years: $13,598 + ($6,801 x 10) = $81,608 tax-free. Any amount above this limit is taxed as an Employment Termination Payment (ETP).

What is the ETP cap?

The ETP cap for 2026-27 is $270,000. For excluded payments such as the taxable part of a genuine redundancy payment, that cap is generally used on its own. For non-excluded life benefit ETPs, the effective cap may instead be the lesser of $270,000 or $180,000 minus other taxable payments. Schedule 11 withholding above the applicable cap is 47%.

What is preservation age and how does it affect ETP withholding?

Preservation age ranges from 55 to 60 depending on date of birth. Schedule 11 tests your age on the last day of the income year in which you receive the ETP. The within-cap withholding rate is 17% if you are at or above preservation age then, or 32% if you are below it.

How are death benefit ETPs taxed?

For a dependant, the taxable component is tax-free up to the $270,000 death-benefit ETP cap and 47% is withheld above it. For a non-dependant, 32% is withheld within the cap and 47% above it. Any separate tax-free component remains tax-free.

What is the whole-of-income cap?

The whole-of-income cap of $180,000 mainly limits concessional treatment for non-excluded life benefit ETPs. If your payment is a genuine redundancy excess, it is generally treated as an excluded ETP and uses the ETP cap instead. For a non-excluded payment, if your other taxable income is $100,000, the whole-of-income limit would reduce the effective cap to $80,000.

Is the withholding estimate my final tax?

Not necessarily. Schedule 11 withholding rates include Medicare levy and determine what the payer withholds. A life-benefit ETP is assessable income and a tax offset limits its maximum tax rate, so your final assessment can differ with your full-year circumstances.

Are these calculations updated for 2026-27?

Yes. This calculator uses the 2026-27 ATO genuine redundancy tax-free limits ($13,598 base + $6,801 per year), the $270,000 ETP cap, and the $180,000 whole-of-income cap. The base, service and ETP cap amounts are indexed annually by the ATO; the whole-of-income cap is fixed by statute and does not index.

How many weeks of redundancy pay am I entitled to under the NES?

Redundancy pay and redundancy tax are two separate questions. The National Employment Standards set the payout: 4 weeks of ordinary pay at 1 year of continuous service, rising to a peak of 16 weeks at 9 years, then dropping to 12 weeks at 10 years or more, with nothing payable under 1 year. Employers with fewer than 15 employees are usually exempt, and an award, enterprise agreement or contract can improve on the NES but not reduce it. This page then prices the tax on whatever that payout comes to.

I volunteered for redundancy — is it still a genuine redundancy?

It can be. The ATO lists "leaving voluntarily" as making a redundancy non-genuine, but that test is about a termination you initiate, such as a resignation. Taxation Ruling TR 2009/2 paragraph 253 says that where an employee volunteers to accept a redundancy package "there may still be a dismissal ... where the decision to terminate employment is still ultimately that of the employer". If your employer decided the roles would go, ran the process and had the final say on who left, putting your hand up does not by itself make the payment non-genuine. The distinction is worth the whole tax-free limit — $81,608 at 10 completed years.

Why does my redundancy calculator result differ from my employer's figure?

The most common reasons are that the employer figure is a gross payout including unused annual and long service leave (taxed under Schedule 7, not Schedule 11), that it counts service in part-years while the tax-free limit only counts completed years, or that it includes payment in lieu of notice, which may or may not be part of the ETP. Work out the payout first, then split it into leave, tax-free redundancy and taxable ETP before comparing.

How is a genuine redundancy payment taxed in Australia?

A genuine redundancy payment has a tax-free amount based on completed years of service. For 2026-27, the limit is $13,598 plus $6,801 for each completed year. Eligible excess is an excluded life-benefit ETP and uses the $270,000 ETP cap.

What is the difference between a genuine redundancy and an ETP?

A genuine redundancy occurs when your position is abolished — the employer no longer needs anyone to do your job. The tax-free component only applies to genuine redundancies. If you are fired, resign, or take a voluntary separation that does not meet the genuine redundancy criteria, the entire payment is treated as an ETP with no tax-free portion.

Does my redundancy payout affect my HELP/HECS repayment?

The taxable component of an ETP can affect your repayment income, while the tax-free amount of a genuine redundancy is not assessable income. Use the HELP calculator with your full-year repayment income rather than adding the entire gross payout.

Can I salary sacrifice my redundancy payout into super?

You cannot retrospectively salary sacrifice a redundancy payment. You may be able to make a personal super contribution after receiving it and claim a deduction if the contribution and notice requirements are met. Check your available 2026-27 concessional cap before contributing.

Is unused annual leave taxed differently from redundancy?

Yes. Unused annual leave and long service leave are not ETPs and use separate withholding schedules. In qualifying genuine-redundancy cases, some unused-leave amounts have a maximum 32% withholding rate including Medicare levy; accrual dates and payment type matter.

Tax Accuracy & Sources

Reviewed: 17 July 2026 · Tax year: 2026-27

Estimates Schedule 11 PAYG withholding on eligible genuine redundancy payments and ETPs. It is not a final income-tax assessment and does not cover unused leave, multiple ETPs, invalidity segments, pre-July 1983 service components, delayed payments, foreign residents or payments through a deceased estate.

Related calculators

ETP (Employment Termination Payment) Calculator Calculate tax on employment termination payments — genuine redundancy, life benefit, and death benefit ETPs for 2026-27 Income Tax Calculator Estimate your 2026-27 income tax Tax-Free Threshold How much you earn before tax starts: pay-cycle equivalents, LITO, the two-jobs trap and the part-year rule TFN Declaration Form Tax file number declaration: the ATO online form, paper NAT 3092, and how to answer every Section A question Pay App Compare salary, bonus, HELP, sacrifice and contractor scenarios Reverse Salary Calculator Enter target take-home, get required gross salary. 2025-26 & 2026-27.