Wondering how much do you get taxed on a second job? The answer is second job tax rates don’t exist; your tax liability will be based on your total assessable income.
Taxes are confusing enough but what if you work a second job or have a side gig? If you want to lodge an accurate, timely tax return, read on to learn about how taxation works when you have more than one job.
The amount of tax you pay when working a second job is determined by your assessable income, which is the total annual income from all earning sources.
This could be your primary job, along with any freelance projects, side gigs, or part-time jobs. Australia follows a progressive tax system.
This means the higher income brackets incur higher tax rates.
Below are the tax rates for this financial year for residents and non-residents.
Taxable Income |
Tax on this Income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 19c for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 plus 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | $29,467 plus 37c for each $1 over $120,000 |
| $180,001 and over | $51,667 plus 45c for each $1 over $180,000 |
Note: The above rates include the Medicare levy of 2%.
Source: ATO 2024
Taxable Income |
Tax on this Income |
|---|---|
| $0 – $120,000 | 32.5c for each $1 |
| $120,001 – $180,000 | $39,000 plus 37c for each $1 over $120,000 |
| $180,001 and over | $61,200 plus 45c for each $1 over $180,000 |
Source: ATO 2024
We’ve heard from many of our clients that they find mock scenarios helpful for understanding second job tax rates.
So if you are wondering how much do you get taxed on a second job, we’ll cover examples of:
If you earn less than $18,200 a year, this is considered below the tax-free threshold. This means you will not owe income tax.
Here’s an example of staying under the tax-free-threshold.
Mock Example
Jamie works part-time at a cafe earning $9,000 a year and also does some weekend work at a bookstore, where she earns an additional $8,000 a year. So, her total money made from both jobs is $17,000.
Total income: $17,000 (under the $18,200 threshold)
Tax owed: $0 (because she’s under the tax-free threshold)
Jamie can fill out a withholding declaration at both jobs saying she wants to claim the tax-free threshold, meaning no tax will be taken out of her pay because she expects to earn less than $18,200. If any tax was mistakenly taken out, Jamie would get it back when she does her tax return.
If you have more than one source of income and exceed the tax-free threshold, you can only claim the tax-free threshold on your highest earning job.
Here’s an example of exceeding the tax-free threshold.
Mock Example
Carlos has a full-time job earning $32,000 a year. Mid-year, he starts a side gig for extra cash, adding $4,000 to his income.
At his side gig, Carlos needs to fill out a withholding declaration saying not to apply the tax-free threshold because he’s already claiming it at his main job.
This helps ensure the right amount of tax is taken out, avoiding a big tax bill at the end of the year.
For his total income of $36,000, Carlos’s tax calculation would be based on the 2023-2024 rates:
Carlos’s actual tax may vary due to other deductions or offsets he might be eligible for, but this gives a basic idea of how it works.
Here’s an example of too much tax withheld.
Mock Example
Priya earns $50,000 from her main job and $5,000 from freelancing. Because she has work-related expenses and makes charitable donations, she often gets a big refund at tax time.
If her withholdings are based on a $55,000 income without considering her deductions, she might have too much tax withheld. By applying for a withholding variation, Priya can adjust the tax withheld to more accurately reflect her expected tax liability after deductions, potentially reducing the amount withheld from her pay.
If you have a primary job and also have a side gig or do freelance projects, it’s important to be familiar with tax laws in Australia, including the tax rate on a second job.
For your primary job, your employer automatically withholds the appropriate tax amount from each check. For a second job, you do not pay taxes immediately.
This means you’ll owe taxes on that income at the end of the year. We recommend setting aside money so that you are prepared to pay owed taxes when you lodge your return.
Here’s an example of too little tax withheld:
Mock Example
Simon has a day job that pays $70,000 a year, and on weekends, he’s a photographer, making an extra $10,000. He thought the tax taken out of his day job would be enough and didn’t adjust when he started earning more from photography.
Because Simon made more money, he should’ve paid more tax. But he forgot to tell his main job to take out more tax to cover his photography earnings.
As such, his taxes look like the below:
The problem is Simon’s main job didn’t know about the photography money, so they didn’t take enough tax out of his payslip.
Simon can fix this by giving a new withholding declaration to his main job, asking them to withhold more tax. Or, he can set aside some of his photography income to pay the extra tax at the end of the year. This way, he won’t be surprised by a big tax bill.
Unexpected income changes can have significant effects on your tax return. If you experience a change in income, be sure to notify your tax professional or check with the ATO.
Here’s an example of unexpected income changes.
Ethan earns $20,000 from a part-time job and $15,000 from tutoring. Halfway through the year, he loses the tutoring job.
With the loss of the tutoring job, Ethan’s income drops to $20,000. Originally, he did not claim the tax-free threshold on his part-time job. He now adjusts his withholdings by submitting a new withholding declaration to the ATO to ensure no tax is withheld from his remaining job.
If you have a main job in which you are employed, the same tax rules apply to this income.
However, for freelancing or contracting income, as you are your own boss in this scenario, no tax is withheld. As such, you will need to set aside a percentage of this income based on what you expect your annual income to be and what tax rate would apply thereof.
Here’s a good example of setting aside money for tax time to avoid any surprise tax bills.
Zoe has a regular job paying $40,000 a year. She also starts doing freelance graphic design work, expecting to make an additional $4,000.
Zoe’s total income places her in a bracket where she would pay 19% tax on some of her income. For the $4,000 freelance income, tax would not be automatically withheld, so Zoe would need to set aside 19% or $760 for tax.
As an Australian resident, you are exempt from paying income taxes on the first $18,200 you earn in a financial year. For example, if your total assessable income is $17,500, you will not owe any taxes.
If you are only an Australian resident for a portion of the year, you may still qualify for an adjusted tax-free threshold.
If you are an Australian resident and you want to claim the tax-free threshold, you can
claim it on the Tax File Number Declaration (TFN) given to your payer when starting a new job or receiving a Centrelink payment.
When asked, “Do you want to claim the tax-free threshold from this employer?”, simply answer “Yes”.
Then, you will not pay tax for income under $18,200. For earnings over $18,200, your payer will withhold tax.
If you don’t claim the tax-free threshold, it will result in higher upfront taxes but a potentially larger refund at the end of the year. You can learn more about the tax-free threshold in our guide here: What Happens If I Don’t Claim the Tax-Free Threshold?
Australian tax law counts any additional work beyond your main employment as a second job.
A second job includes:
The ATO defines a withholding declaration as “authorising your payer to adjust the amount of tax withheld from your payments”.
The ATO states that you can use this declaration to claim or discontinue claiming the tax-free threshold, advise your payer that you have become an Australian resident for tax purposes, and a variety of other reasons. You can learn more here on the ATO’s site: Withholding Declaration.
Our Tax Refund Calculator can give you a rough estimate simply by entering your total income. If you are curious about the second job tax rate, make sure to include your earnings from all income sources to get the most accurate estimate.
To lodge your tax return with multiple jobs, gather all of your income information, including any sources of additional income beyond your primary employment.
Be sure to claim any tax offsets or deductions, if applicable, to your second job. Throughout the year, keep detailed records of your expenses, income, deductions, and receipts related to any sources of income.
If your total annual income is less than $18,200, you can claim the tax-free threshold. If you earn over $18,200, you will likely receive a tax bill and be responsible for paying any taxes you owe.
Understanding second job tax rates is essential for managing your finances effectively.
Remember, if your total income is under $18,200, you may not owe any tax. However, if you exceed this threshold, ensure you’re only claiming the tax-free threshold on your highest earning job.
Adjust withholdings if necessary to avoid over or underpaying taxes, and keep accurate records of all income sources.
Need help understanding your personal tax obligations? Our team of tax professionals are here to assist you every step of the way. Don’t miss out on potential tax refunds—reach out today for expert guidance on maximising your tax return.
Disclaimer: The information on this blog is for general informational purposes only and should not be considered professional advice. Any examples provided are for illustration purposes only and may not apply to your situation. Consult a qualified professional before making decisions based on the content. We make no guarantees regarding the accuracy or reliability of the information. We are not liable for any loss or damage resulting from the use of this blog. Third-party links are provided for convenience; we do not endorse their content. By using this blog, you agree to these terms.
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