Non-Resident vs Resident Tax: Side-by-Side Comparison (2025-26)
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Primary tax-year context: 2025-26
This article is general information only. We maintain pages using primary-source checks and date-based reviews. See editorial policy.
General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.
Non-residents of Australia are taxed under a separate rate table, have no tax-free threshold, and miss out on several concessions. This article compares the two side by side at common income levels so you can see the actual dollar difference.
Income tax comparison (2025-26)
Resident rates
| Taxable income | Rate |
|---|---|
| $0 – $18,200 | 0% |
| $18,201 – $45,000 | 16% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
Plus 2% Medicare levy on total taxable income.
Non-resident rates
| Taxable income | Rate |
|---|---|
| $0 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
No Medicare levy. No tax-free threshold. No Low Income Tax Offset (LITO).
Dollar comparison at common salary levels
| Salary | Resident tax (inc. Medicare) | Non-resident tax | Extra tax as non-resident |
|---|---|---|---|
| $60,000 | $9,988 | $18,000 | +$8,012 |
| $90,000 | $19,588 | $27,000 | +$7,412 |
| $120,000 | $29,188 | $36,000 | +$6,812 |
| $150,000 | $39,838 | $46,050 | +$6,212 |
| $200,000 | $60,138 | $65,350 | +$5,212 |
| $300,000 | $107,138 | $110,350 | +$3,212 |
The gap narrows but does not cross over
Non-residents always pay more on Australian-sourced income alone. But the gap shrinks at higher incomes because:
- Non-residents do not pay the 2% Medicare levy (worth $3,000 at $150k, $6,000 at $300k)
- Above $135,000, the marginal rates are identical (37% and 45%)
However, the resident advantages (tax-free threshold and 16% bracket) are worth about $9,212 in total — and the Medicare levy saving only matches that at roughly $460,000 in income. Below that level, non-residents always pay more.
Residents who earn above $93,000 and do not have private health insurance also pay the Medicare Levy Surcharge (1%–1.5%), which non-residents avoid. Including MLS, the gap narrows further.
Capital gains tax comparison
This is where the biggest gap appears. Non-residents who acquired assets after 8 May 2012 have no access to the 50% CGT discount.
| Capital gain | Resident CGT (with discount, inc. Medicare) | Non-resident CGT | Difference |
|---|---|---|---|
| $50,000 | $1,588 | $15,000 | +$13,412 |
| $100,000 | $6,788 | $30,000 | +$23,212 |
| $200,000 | $22,788 | $60,000 | +$37,212 |
| $500,000 | $83,638 | $200,350 | +$116,712 |
Assumes no other Australian income. Resident figures include the 50% discount, tax-free threshold, and Medicare levy.
At $500,000 in capital gains, a non-resident pays roughly 2.4 times what a resident would.
Other concessions non-residents miss
| Concession | Resident | Non-resident |
|---|---|---|
| Tax-free threshold ($18,200) | Yes | No |
| Low Income Tax Offset (up to $700) | Yes | No |
| 50% CGT discount | Yes (12+ months) | No (post-May 2012 assets) |
| Main residence CGT exemption | Yes | Generally no |
| Medicare levy | 2% (a cost) | Not payable (a saving) |
| Medicare Levy Surcharge | May apply | Not payable |
| SAPTO (seniors offset) | Yes | No |
When non-resident status might work in your favour
Despite the disadvantages on Australian-sourced income, non-resident status has real benefits:
- Only Australian-sourced income is taxable — overseas earnings are generally not taxed by Australia. This is the biggest advantage for anyone earning most of their income abroad.
- No Medicare levy — saves 2% of total taxable income
- No MLS — no need to hold private health insurance to avoid the surcharge
- Simpler return — only need to declare Australian-sourced income
For someone earning $300,000 overseas and $50,000 from Australian rent, non-resident status means only $15,000 in Australian tax — whereas a resident would owe tax on the full $350,000.
Key takeaways
- Non-residents pay more income tax at all normal salary levels due to losing the tax-free threshold and 16% bracket
- The gap narrows at higher incomes as the Medicare levy saving grows, but only closes at very high incomes (~$460k+)
- The biggest penalty is on capital gains — non-residents pay roughly 2–2.5 times the CGT of residents
- Losing the main residence exemption is the single most costly consequence for property owners
- The real advantage of non-resident status is exemption from tax on overseas income — not a lower rate on Australian income
Sources
- ATO: Tax rates for Australian residents
- ATO: Tax rates for foreign residents
- ATO: CGT discount for foreign residents
- ATO: Medicare levy
Related tools
- Income Tax Calculator — compare resident and non-resident tax at your income level
- Capital Gains Tax Calculator — model your CGT with or without the discount
- Pay Calculator — see your take-home pay breakdown