What is the Low Income Tax Offset?
The Low Income Tax Offset (LITO) is a tax offset that reduces the amount of tax payable for Australian residents with a taxable income of $66,667 or less. It is automatically applied by the ATO when your tax return is assessed — you do not need to apply for it.
LITO rates for 2025-26
| Taxable income | LITO amount |
|---|---|
| $37,500 or less | $700 (maximum) |
| $37,501 – $45,000 | $700 minus 5c for each $1 over $37,500 |
| $45,001 – $66,667 | $325 minus 1.5c for each $1 over $45,000 |
| $66,668 or more | Nil |
Key things to know about LITO
LITO is a non-refundable offset. This means it can reduce your tax to zero, but it cannot generate a refund by itself. If your tax liability is already zero (e.g., because your income is below the $18,200 tax-free threshold), LITO has no additional effect.
LITO is not shown on your payslip. Your employer withholds tax based on the PAYG tables, which do not account for LITO. The offset is applied when you lodge your tax return, which is one reason many lower-income earners receive a tax refund.
Calculate your LITO
The Pay Calculator automatically includes LITO in all calculations. Enter your salary to see how much LITO reduces your tax.