Compulsory repayment on $40,000
You pay nothing
What this means
A repayment income of $40,000 is $29,528 short of the 2026-27 minimum threshold of $69,528, so no compulsory HECS-HELP repayment is required for the year.
Enter reportable fringe benefits, investment losses and other add-backs in the full calculator.
2026–27 rates
| Repayment income | Repayment |
|---|---|
| $0 – $69,528 | Nil |
| $69,529 – $129,717 | 15c per $1 over $69,528 |
| $129,718 – $186,050 | $9,028 + 17c per $1 over $129,717 |
| $186,051 and over | 10% of total repayment income |
Take-home pay on $40,000
After income tax, the Medicare levy, the low income tax offset and this HECS repayment, $40,000 works out to $36,505.00 a year in the bank.
Assumes a full-year Australian resident with no other deductions, offsets or the Medicare levy surcharge. Figures from data/tax-rates.json, ATO-verified separately from the HECS rates above.
Income tax brackets on $40,000
$40,000 reaches 2 resident income tax brackets for 2026–27. Worked bracket by bracket, the $3,270.00 total below is exactly what feeds into the take-home figure above.
| Bracket | Rate | Tax in this bracket |
|---|---|---|
| $0 – $18,200 | Nil | $0 |
| $18,201 – $40,000 | 15% | $3,270.00 |
How $40,000 becomes $0
The arithmetic here is short because there is not any: $40,000 sits under the $69,528 threshold, so the repayment is $0. Nothing is pro-rated and nothing carries over — the ATO does not charge a smaller amount for being close to the line.
Under the 2025-26 rules the repayment on $40,000 would have been identical: $0.00. The threshold moved between the two years but not by enough to change this particular figure.
Here is what a raise actually looks like on $40,000: the next dollar loses 15c to income tax, 2c to the Medicare levy, and nothing to HECS, since you are under the repayment threshold — 83.0c makes it to your bank account. That is the marginal rate on the next dollar, not the average rate on $40,000 as a whole; every dollar already earned kept more, because the earlier brackets charge less.
A $5,000 raise on $40,000 does not arrive whole. Income tax takes $750.00 of it, the Medicare levy $100.00, and HECS nothing — $3,900.00 (78%) actually lands in the bank.
Under the threshold, $29,528 of headroom at $40,000
At $40,000 you are $29,528 below the 2026-27 threshold of $69,528, so no compulsory repayment is required. Crossing the line does not trigger a bill for a share of the whole $69,528: one dollar over, the repayment is $0.15, because 15 cents is charged only on dollars above $69,528. A pay rise cannot leave you worse off. There is no cliff here to fall off.
The $40,000 figure this page is built on is repayment income, which is not the same as the salary on your payslip. The ATO starts from taxable income and adds back reportable fringe benefits, reportable super contributions, total net investment loss and exempt foreign employment income, then subtracts any First Home Super Saver amount released to you. Someone earning well under $40,000 in cash can land here after a novated lease and salary-sacrificed super are counted.
Your employer does not withhold nothing and send it to the ATO as a HECS payment. Withholding is an estimate taken from the pay-period tables against what you declared on your TFN declaration, and it sits in the same pot as your income tax. The nothing is only assessed when you lodge, which is why the amount withheld across the year and the repayment you actually owe on $40,000 rarely match to the dollar.
Indexation is separate from the nothing repayment and runs on its own clock. On 1 June the ATO indexes the part of your balance that has been unpaid for more than 11 months, the 2026 rate was 2.8%. It applies to the debt, not to your income, so it happens whether or not a compulsory repayment was due on $40,000 this year.
A voluntary repayment sits on top of the compulsory nothing rather than replacing it, paying extra during the year does not reduce what is assessed at lodgment on $40,000. Where it does bite is indexation: money paid before 1 June comes off the balance that gets indexed, so the timing matters more than the amount.
Common questions
Do I pay HECS on $40,000?
No. $40,000 is $29,528 below the 2026-27 minimum repayment threshold of $69,528, so no compulsory repayment is required. Voluntary repayments are still allowed at any time.
Is this based on my salary or my taxable income?
Neither exactly. It is repayment income: taxable income plus reportable fringe benefits, reportable super contributions, total net investment loss and exempt foreign employment income, less any First Home Super Saver released amount.
Why doesn't the amount taken from my pay match this?
Withholding is an estimate based on each pay period, while the nothing is assessed once on your full-year $40,000. The difference is settled when you lodge your return.
Does indexation get added to this repayment?
No. The nothing is the compulsory repayment. Indexation is a separate annual adjustment applied on 1 June to the balance unpaid for more than 11 months, at 2.8% for 2026.
Can I pay extra to avoid this?
You can make voluntary repayments at any time, but they do not reduce the compulsory nothing assessed on $40,000. They reduce the balance, and if made before 1 June, the balance that is indexed.
Nearby salaries compared
How the compulsory repayment moves either side of $40,000, worked out the same way as above for each.
On the ladder this page sits on: Step up to $45,000 and the repayment becomes $0 — $0.00 more than here.
| Salary | Repayment | Effective rate | Take-home, per year |
|---|---|---|---|
| $45,000 | $0 | 0.0% | $40,405.00 |
| $50,000 | $0 | 0.0% | $43,730.00 |
| $55,000 | $0 | 0.0% | $47,055.00 |
| $60,000 | $0 | 0.0% | $50,380.00 |
| $65,000 | $0 | 0.0% | $53,705.00 |
| $70,000 | $70.80 | 0.1% | $57,009.20 |