How much should a tradie set aside for tax?
As a rough rule, many Australian sole traders put aside about 25–30% of every dollar of profit for income tax — but the right number depends on how much you earn, because tax is progressive. The calculator works out your actual estimate from current ATO rates. Open a separate bank account, move that % across every time you get paid, and tax time stops being scary.
The rates this uses
A sole trader pays tax at the standard individual rates — there's no separate business rate; your profit is added to any other income. Resident rates:
| Taxable income | 2025–26 | 2026–27 |
|---|---|---|
| $0 – $18,200 | Nil | Nil |
| $18,201 – $45,000 | 16% | 15% |
| $45,001 – $135,000 | 30% | 30% |
| $135,001 – $190,000 | 37% | 37% |
| $190,001+ | 45% | 45% |
Plus the 2% Medicare levy once your income is over the low-income threshold (~$27,000). The lowest bracket drops from 16% to 15% on 1 July 2026, so the year toggle matters. Rates exclude any HECS/HELP debt and assume you're a resident with no other offsets.
Setting aside for quarterly tax — when PAYG instalments start
After your first profitable year the ATO moves you onto quarterly pre-payments, and you don't opt in, it happens automatically. For a sole trader the trigger is all three at once. $4,000 or more of instalment income on your latest return, over $1,000 tax payable on your latest assessment, and $500 or more of estimated tax. The letter arrives in your myGov inbox, and most people pay quarterly from then on. The quarters fall due 28 October, 28 February, 28 April and 28 July.
If you've been moving the percentage across every payday, those instalments are already sitting in the account. If you haven't, four bills a year hurt exactly the way one does.
Source: ATO, Starting PAYG instalments, read 3 October 2026.
Watch it move as you earn, not once a year
A percentage is a plan. What breaks it is the quarter where the number quietly changes and nobody re-runs it. Yamate keeps your put-aside estimate current against real income as it lands.
Track this in Yamate → Free to try · no card · sign in with a link, no password to rememberWant the job before it is advertised? Homeowners post their problems in Who Do I Call? Australia, our free Facebook group. Answer one well and you are the tradie they ring. Join, help out, and put your business in front of the people asking.
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FAQ
How much should I put away for tax as a sole trader?
Roughly 25–30% of your profit is a safe starting buffer for most full-time tradies, but use the calculator with your real numbers — someone on $50k sets aside far less of each dollar than someone on $150k, because tax is progressive.
Do I pay tax on the GST I collect?
No. GST isn't income — you're collecting it for the ATO and pay it back on your BAS. Keep GST separate from your tax set-aside so you don't double-count or get caught short.
When do I actually pay the tax?
You pay when you lodge your tax return after 30 June. Once you've been profitable, the ATO usually shifts you to quarterly PAYG instalments — money you've set aside along the way covers these.
More free tools for tradies
A general estimate for Australian resident sole traders. It ignores HECS/HELP, offsets, deductions beyond your stated expenses, and the Medicare levy phase-in. Tax rates change — confirm with the ATO or your accountant. Last updated October 2026.