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.
Don't forget PAYG instalments
After your first year of business profit, the ATO usually puts you onto PAYG instalments — you pre-pay your tax in quarterly chunks instead of one big bill. If you've been setting money aside as you go, those instalments are already covered. If you haven't, they hurt.
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
This is a general estimate for Australian resident sole traders, not tax advice. 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 June 2026.