Tax on a second job in Australia
Two jobs, one tax-free threshold. How to set up withholding, why the second pay packet looks small, and what the extra income actually adds to your year.
By Borja Pérez · Updated September 2026 · Figures are FY 2026-27
Picking up a second job, casual shifts or a side gig is common, and the first surprise is usually the pay: the second job seems to lose a big chunk to tax. Nothing is wrong. Australia taxes your combined income for the year, and each employer only sees their own slice of it. Getting the setup right avoids both an unpleasantly small second payslip and a tax bill in July.
Claim the tax-free threshold once
The tax-free threshold is the first $18,200 of income you pay no tax on. You get it once a year, not once per job. The ATO’s guidance is that when you have more than one payer at the same time, you generally claim the threshold from only one of them, usually the one that pays you the most. “Payer” includes employers, your own sole trader work under an ABN, and taxable payments such as a pension or government allowance.
- On your tax file number declaration for your highest-paying job, say you want to claim the tax-free threshold.
- On the declaration for every other job, say you do not claim it. Those employers then withhold at the higher “no tax-free threshold” rate.
- If you change jobs, complete a new declaration for the new employer and choose again.
- Only if your total income from all sources will be $18,200 or less can you claim the threshold from every payer.
A worked example: $70,000 job plus $30,000 job
A resident earns $70,000 in their main job and $30,000 in a second one. The tax on the combined $100,000 is worked out on the whole amount, not job by job.
| Gross | Tax + Medicare | Take-home | |
|---|---|---|---|
| Main job alone | $70,000 | $12,920 | $57,080 |
| Main + second job | $100,000 | $22,520 | $77,480 |
| Extra from the second job | $30,000 | $9,600 | $20,400 |
So the $30,000 second job adds $20,400 to take-home pay: about 68 cents in the dollar. That is the 30% bracket plus the 2% Medicare levy, the same as any extra income at this level. It’s not a penalty for having two jobs; it’s just your marginal rate (see marginal vs effective tax rate).
What happens if you claim it twice
Suppose that same person claims the tax-free threshold in both jobs. Each employer withholds as if that job were the only income. On $70,000 alone that’s roughly $12,900 (tax plus Medicare); on $30,000 alone about $1,300. Together, roughly $14,200. But the tax on $100,000 is $22,520. The gap of around $8,300 is collected when you lodge your return, as a tax bill.
The reverse is also true: if you claim the threshold on your main job only, withholding on the second job is higher, and you may get some of it back as a refund if it overshoots. Under-withholding is the risky direction, so when in doubt, don’t claim it twice.
If you still expect a shortfall, you can ask a payer to withhold extra tax, or lodge a PAYG withholding variation application with the ATO to change the amount withheld. Setting a little money aside during the year is the simplest safeguard.
Other things a second income can affect
- Study loan repayments. HECS-HELP is based on your total repayment income, so a second job can push you into a repayment band. See the HECS-HELP repayment calculator.
- Medicare levy surcharge. The threshold applies to your total income, not per job.
- Super. Each employer pays 12% super on your ordinary time earnings, so you build super in both jobs.
- Sole trader or ABN work. If the second income is under an ABN, nobody withholds tax unless you arrange it, so you need to set aside money yourself.
Frequently asked questions
Can I claim the tax-free threshold on both jobs?
Generally only from one payer, usually the highest-paying. If your total income from all sources will be $18,200 or less, you can claim it from all of them.
Why is so much tax taken out of my second job?
Without the tax-free threshold, tax starts from the first dollar. That is intentional: it spreads the tax on your combined income. Use the calculator with your combined salary to see the total.
Can I end up with a tax bill?
Yes, if too little was withheld across your jobs. The ATO works out your total tax when you lodge and collects any difference. If too much was withheld, you get a refund.
This guide is general information about the 2026-27 year for Australian residents, not personal tax advice. The ATO’s multiple jobs guidance explains the declaration rules, and employer withholding follows ATO tables, so actual amounts differ slightly. Full workings are on our methodology page.