Complete side-by-side comparison of United States and Australian tax systems including federal income tax, Social Security vs Medicare Levy & Superannuation, state taxes, and total tax burden analysis.
Key differences between USA and Australia tax systems at a glance
| Category | <ú<ø United States | <æ<ú Australia |
|---|---|---|
| Federal Income Tax Range | 10% - 37% | 0% - 45% (includes Medicare Levy) |
| Medicare/Healthcare Levy | 1.45% (+ 0.9% for high earners) | 2% Medicare Levy (flat rate) |
| Social Security/Super | 6.2% Social Security | 11.5% Superannuation (paid by employer) |
| State/No State Taxes | 0% - 13.3% (varies by state) | 0% (no state income tax) |
| Tax-Free Threshold | $14,600 (standard deduction) | AU$18,200 (tax-free threshold) |
| Capital Gains Tax | 0% - 20% (federal) + state | 50% discount if held >12 months, taxed at marginal rate |
| Healthcare System | Private (employer/individual paid) | Universal Medicare (tax-funded) |
| Sales Tax (GST) | 0% - 10% (varies by state) | 10% GST (federal) |
| Tax Filing Deadline | April 15 | October 31 |
The tax rates are surprisingly similar between USA and Australia:
" Lower incomes ($30k-50k): USA ~22-28% vs Australia ~25-30% total
" Middle incomes ($50k-100k): USA ~25-35% vs Australia ~30-37% total
" Higher incomes ($100k+): USA ~30-50% (depending on state) vs Australia ~38-47% total
" Key difference: Australia's 11.5% Superannuation is paid by EMPLOYER (not deducted from your salary), so you effectively get a "free" retirement contribution
" Australia includes: Universal Medicare, 4 weeks annual leave (mandated), 10 days sick leave, Long Service Leave
| <ú<ø USA Federal Tax Brackets (Single Filer) | ||
|---|---|---|
| Income Range | Tax Rate | Notes |
| $0 - $11,600 | 10% | Lowest bracket |
| $11,601 - $47,150 | 12% | - |
| $47,151 - $100,525 | 22% | - |
| $100,526 - $191,950 | 24% | - |
| $191,951 - $243,725 | 32% | - |
| $243,726 - $609,350 | 35% | - |
| $609,351+ | 37% | Top rate |
| <æ<ú Australia Federal Tax Brackets (2024-25) | ||
|---|---|---|
| Income Range | Tax Rate | Notes |
| AU$0 - AU$18,200 | 0% | Tax-free threshold |
| AU$18,201 - AU$45,000 | 16% | Includes 2% Medicare Levy |
| AU$45,001 - AU$135,000 | 30% | + 2% Medicare = 32% total |
| AU$135,001 - AU$190,000 | 37% | + 2% Medicare = 39% total |
| AU$190,001+ | 45% | + 2% Medicare = 47% total (top rate) |
USA ($75,000):
" Federal tax: ~$10,294 (13.7%)
" FICA (Social Security + Medicare): $5,738 (7.65%)
" Total federal: $16,032 (21.4%)
" Plus state tax (0-13.3% depending on state)
" Healthcare insurance: $5,000-15,000/year (separate)
Australia (AU$115,000):
" Income tax + Medicare Levy: ~AU$30,667 (26.7%)
" Superannuation: AU$13,225 (11.5%) - PAID BY EMPLOYER, not you
" Your total: AU$30,667 (26.7% of your salary)
" Healthcare included via Medicare Levy
Australia's effective rate is ~5% higher, but includes Medicare and you get 11.5% Super contribution from employer
| Aspect | <ú<ø Social Security | <æ<ú Superannuation |
|---|---|---|
| Employee Contribution | 6.2% (mandatory, deducted from salary) | 0% (optional voluntary contributions) |
| Employer Contribution | 6.2% (on top of salary) | 11.5% (mandatory, on top of salary) |
| Who Pays | You pay 6.2% from your paycheck | Employer pays 11.5%, you keep your full salary |
| Income Cap | $168,600 (2025) | No cap |
| Access to Funds | Age 62-67 (depending on birth year) | Age 60 (preservation age) |
| Investment Control | None (government-managed) | You choose your super fund & investments |
| Typical Monthly Benefit | $1,907 average (2025) | Depends on your balance (average ~AU$250k at retirement) |
USA: You pay 6.2% Social Security from YOUR salary ($4,650/year on $75k income)
Australia: Employer pays 11.5% Superannuation ON TOP of your salary ($8,625/year on $75k income) - you don't lose ANY of your paycheck
Example on AU$100,000 salary:
" You receive: AU$100,000 in your pocket
" Employer also contributes: AU$11,500 to your Super account
" Total compensation: AU$111,500, but you only pay tax on AU$100,000
Over a 40-year career, this "free" 11.5% compounds to build substantial retirement savings (avg AU$250k-500k)
| State/Comparison | State Income Tax | Total Tax Burden |
|---|---|---|
| <ú<ø USA States (Examples) | ||
| Texas (No State Tax) | 0% | ~21-37% federal only |
| Florida (No State Tax) | 0% | ~21-37% federal only |
| California (High State Tax) | 1% - 13.3% | ~33-50% combined |
| New York | 4% - 10.9% | ~30-48% combined |
| <æ<ú Australia (All States) | ||
| New South Wales, Victoria, Queensland, etc. | 0% (no state income tax) | ~16-47% federal only |
Australia abolished state income taxes in 1942 and never brought them back. This simplifies the tax system significantly:
" USA: Must file federal + state returns (2 tax systems)
" Australia: One tax return, one system
" Moving within country: USA = tax implications, Australia = no tax changes
" Comparison: Living in Sydney (0% state tax) vs California (13.3% state tax) = 13% more take-home in Australia at high incomes
| Aspect | <ú<ø USA | <æ<ú Australia |
|---|---|---|
| Healthcare Tax | 1.45% Medicare (only for 65+) | 2% Medicare Levy (covers everyone) |
| Insurance Premiums | $400-800/month individual $1,200-2,000/month family |
$0 (included in levy) Optional private: $100-300/month |
| Deductibles | $1,000-8,000/year | $0 for public system |
| Co-Pays | $20-50 per visit | $0 for public, bulk-billed doctors |
| Hospital Costs | $10,000-50,000+ (after insurance) | $0 in public hospitals |
| Prescription Drugs | $10-500+ per medication | Max AU$31.60 per script (PBS scheme) |
| Annual Healthcare Cost | $6,000-35,000/year (incl. premiums + out-of-pocket) | $1,500-3,000/year (2% levy on $75k-150k income) |
USA Example ($75,000 income):
" Medicare tax: $1,088 (1.45%) - doesn't cover you until 65
" Health insurance premium: $7,200/year ($600/month average)
" Deductible + co-pays: $2,000/year
" Total: $10,288/year (13.7% of income)
Australia Example (AU$115,000 income):
" Medicare Levy: AU$2,300 (2%) - covers you completely
" Additional costs: $0 (public system)
" Total: AU$2,300/year (2% of income)
Australia's healthcare costs ~11% less of your income than USA, with better coverage
How much you actually keep at different income levels
| Scenario | <ú<ø USA Take-Home | <æ<ú Australia Take-Home | Winner |
|---|---|---|---|
| $50,000 / AU$77,000 (Texas) | ~$41,500 (83%) | ~AU$63,500 (82%) | =ð Tie (similar) |
| $75,000 / AU$115,000 (Florida) | ~$59,000 (79%) | ~AU$84,300 (73%) | <ú<ø USA (+6% more) |
| $100,000 / AU$154,000 (Texas) | ~$75,000 (75%) | ~AU$106,700 (69%) | <ú<ø USA (+6% more) |
| $100,000 / AU$154,000 (California) | ~$63,000 (63%) | ~AU$106,700 (69%) | <æ<ú Australia (+6% more!) |
| $150,000 / AU$231,000 (NY) | ~$95,000 (63%) | ~AU$145,000 (63%) | =ð Tie (similar) |
| $200,000+ (High earners) | ~58-65% take-home (state dependent) | ~53-60% take-home | <ú<ø USA (in no-tax states) |
Notes: (1) USA figures exclude $6k-25k/year healthcare costs. Australia includes Medicare. (2) Australia figures don't include 11.5% employer Super contribution you receive. (3) Exchange rate: 1 AUD = 0.65 USD
USA $100k in Texas:
" Take-home: $75,000
" Healthcare costs: -$10,000
" Employer retirement: +$6,200 (401k match, if available)
" Effective take-home: $71,200
Australia AU$154k:
" Take-home: AU$106,700 (~$69,355 USD)
" Healthcare costs: $0 (included)
" Employer Super: +AU$17,710 (~$11,511 USD)
" Effective take-home: $80,866 USD equivalent
When you include healthcare + Super, Australia offers 13% more total compensation at this income level
Compare USA and Australia taxes with your specific income, state, and personal situation
=° Try Free Tax Calculator| Factor | <ú<ø USA | <æ<ú Australia |
|---|---|---|
| Minimum Vacation Days | 0 (not mandated) | 4 weeks (20 days) mandated |
| Sick Leave | 0 (varies by employer) | 10 days/year mandated |
| Parental Leave | 0 weeks paid (federal) | 18 weeks paid at minimum wage |
| Minimum Wage | $7.25/hour federal | AU$23.23/hour (~$15.10 USD) |
| Average Salary (2025) | ~$60,000 | ~AU$95,000 (~$61,750 USD) |
| Worker Protections | At-will employment (can be fired anytime) | Strong unfair dismissal laws |
| Long Service Leave | None | 2-3 months paid after 10 years (varies by state) |
| Public Holidays | 0 mandated federal | 10-13 days (varies by state) |
" Earn $150k+ and can live in a no-tax state (Texas, Florida, Nevada)
" Have excellent employer-provided healthcare
" Want to maximize short-term take-home pay
" Are in tech/finance with stock options and high compensation
" Don't mind less vacation time and weaker worker protections
" Prefer managing your own retirement contributions
" Value work-life balance (4 weeks vacation + 10 sick days + public holidays)
" Want universal healthcare without insurance stress or medical bankruptcy risk
" Like "free" retirement savings (11.5% Super paid by employer on top of salary)
" Earn $50k-120k (similar or better total compensation after benefits)
" Want stronger worker protections and job security
" Prefer living in a country with no state income tax (tax simplicity)
" Value quality of life metrics (Australia ranks #5 globally vs USA #20)
For middle incomes ($50k-100k), they're surprisingly similar (~5% difference). USA has slight edge in low-tax states. But Australia includes Medicare, 4 weeks vacation, and 11.5% employer Super contribution. When including total compensation, Australia often provides better value.
Slightly - about 3-7% higher at most income levels. But Australia has NO state income tax (USA has 0-13.3%), includes Medicare in the 2% levy (USA pays $5k-25k/year separately), and employer pays 11.5% Super on top of your salary.
USA (Texas): ~$25,000 (25%) taxes, take-home $75,000
Australia: ~AU$36,300 (31%) taxes, take-home AU$99,700 (~$64,805 USD)
However, USA must pay $10k healthcare separately, and Australia receives AU$11,500 (~$7,475 USD) employer Super contribution.
USA: You pay 6.2% from your salary for Social Security
Australia: Employer pays 11.5% Super ON TOP of your salary (you keep 100% of your paycheck)
This is Australia's massive advantage - you get retirement savings without losing any take-home pay.
Yes, through skilled migration (if you have in-demand skills), employer sponsorship (if company sponsors you), or business/investor visas. Australia uses a points-based system favoring younger workers (under 45) with in-demand skills in tech, healthcare, engineering, trades.
Explore other tax comparisons to make informed decisions