# AUSFA-0004 — Top marginal rate threshold (FY2025-26)

*Benchmarking hypothetical, not tax advice.*

## Answer

For an Australian **resident individual** in the **2025–26** financial year, the **top marginal income tax rate of 45%** applies to **taxable income above $190,000**.

The dollar threshold at which that top bracket starts is **$190,000** (the first dollar taxed at 45% is $190,001; Medicare levy is separate).

The **controlling authority** that sets resident individual income tax rates is the **Income Tax Rates Act 1986** (ITRA 1986), as amended, which prescribes the rate scales for the year of income.

## Working

Resident individuals are taxed on taxable income using a progressive scale. For 2025–26, the marginal rates below the top bracket are:

| Taxable income (resident) | Marginal rate |
|---------------------------|---------------|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| **Above $190,000** | **45%** |

The question asks for the threshold where the **45%** rate **begins**. That is the floor of the top bracket: **$190,000**. All taxable income **over** $190,000 is subject to 45% on those dollars (subject to the usual legislative wording in the rate scale).

The **$180,000** figure is not correct for 2025–26; it reflects an older top-bracket point from earlier rate schedules, not the scale in force for this year.

## Approach

No `inputs/` materials were present in the task directory. The answer was derived from the statutory resident individual rate scale for **FY2025–26** under the **Income Tax Rates Act 1986**, matching the progressive bands (nil, 16%, 30%, 37%, then 45% above $190,000). No external lookup was used, per closed-book constraints.