Low income tax offset (LITO)
The Low Income Tax Offset, or LITO, cuts the income tax of lower earners. You do not claim it. The ATO applies it automatically when your return is assessed. The maximum is $700 for taxable income up to $37,500. It then reduces by 5c for each dollar to $45,000, where it is $325, and by 1.5c for each dollar after that, reaching zero at $66,667. LITO reduces income tax only. It never reduces the Medicare levy or a HELP repayment, and it cannot take your tax below zero. This is general information, not advice.
| Taxable income | Offset |
|---|---|
| Up to $37,500 | $700 (maximum) |
| $37,500 – $45,000 | $700 less 5c per $1 over $37,500 |
| $45,000 – $66,667 | $325 less 1.5c per $1 over $45,000 |
| Over $66,667 | Nil |
LITO is applied automatically in your assessment — see its effect on a real salary, e.g. $45,000 or $60,000, or use the take-home calculator.
The offset from 2015–16 to 2026–27
| Year | Maximum LITO | Full offset up to | Reaches nil at | Low and middle income offset, maximum |
|---|---|---|---|---|
| 2015–16 | $445 | $37,000 | $66,667 | — |
| 2016–17 | $445 | $37,000 | $66,667 | — |
| 2017–18 | $445 | $37,000 | $66,667 | — |
| 2018–19 | $445 | $37,000 | $66,667 | $1,080 |
| 2019–20 | $445 | $37,000 | $66,667 | $1,080 |
| 2020–21 | $700 | $37,500 | $66,667 | $1,080 |
| 2021–22 | $700 | $37,500 | $66,667 | $1,500 |
| 2022–23 | $700 | $37,500 | $66,667 | — |
| 2023–24 | $700 | $37,500 | $66,667 | — |
| 2024–25 | $700 | $37,500 | $66,667 | — |
| 2025–26 | $700 | $37,500 | $66,667 | — |
| 2026–27 | $700 | $37,500 | $66,667 | — |
The maximum offset rose from $445 to $700 in 2020–21 and has not changed since. On $40,000 it is $575, $175 more than the $400 the earlier rules gave. A separate low and middle income tax offset applied from 2018–19 to 2021–22, worth up to $1,080 and later $1,500. What its end did to tax bills: the same salary, twelve tax years.
Frequently asked
- Do I need to claim LITO?
- No. LITO is automatic. The ATO applies it when it assesses your tax return, based on your taxable income. There is nothing to fill in to receive it.
- How much is LITO?
- The maximum is $700 for taxable income up to $37,500. It reduces by 5c per dollar to $325 at $45,000, then by 1.5c per dollar, reaching zero at $66,667.
- Does LITO reduce the Medicare levy?
- No. LITO reduces income tax only. It does not reduce the Medicare levy, the surcharge or a HELP repayment, and it cannot take your income tax below zero.