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HECS Repayment Rates & Thresholds — FY2025-26

By , Melbourne Read: 4 min Checked against: ATO, Study Assist

Official reference for the FY2025-26 HECS-HELP repayment schedule, effective 1 July 2025. Includes the new marginal brackets, the 20% HELP debt cut applied 1 June 2025, worked examples, and a comparison with the old whole-of-income system.

FY2025-26 repayment schedule — the new marginal system

HECS-HELP repayment thresholds for FY2025-26 (effective 1 July 2025) — marginal system
Repayment incomeRepayment calculation
$0 – $67,000Nil — no compulsory repayment
$67,001 – $125,00015c for every $1 over $67,000
$125,001 – $179,285$8,700 + 17c for every $1 over $125,000
$179,286 and above10% of total repayment income (whole-of-income)

Big change from 2024-25: The new marginal system means repayment is calculated only on income above $67,000 (except at the top bracket). Under the old system, the rate applied to your entire income. Source: Australian Taxation Office — Repayment thresholds and rates 2025-26; Higher Education Legislation Amendment (20% Reduction of HELP Debts) Act 2025. Repayment income = taxable income + reportable fringe benefits + reportable super + net investment loss + exempt foreign employment income.

What changed from 2024-25 — the biggest reform in decades

Two legislated changes apply from 1 July 2025:

  • Threshold lifted from $54,435 to $67,000. A $12,565 lift in the point where compulsory repayment begins.
  • 18-bracket whole-of-income system replaced with four marginal brackets. Repayment is now calculated only on income above $67,000 (except at the top). The old system applied the rate to your whole income — often punishing.
  • 20% one-off HELP debt cut. Applied automatically by the ATO on 1 June 2025, before 2025 indexation. A $30,000 balance became $24,000 overnight.
  • Indexation cap (CPI or WPI, whichever is lower). In place since 1 June 2023, applied retrospectively to 2023 and 2024 rates, with credits issued in late 2024.

Policy source: Higher Education Legislation Amendment (20% Reduction of HELP Debts) Act 2025 (passed Senate 31 July 2025) and the Universities Accord (Student Support and Other Measures) Act 2024.

Worked examples — five common incomes under the new system

  • $60,000 income: below $67,000 threshold = $0/year.
  • $80,000 income: 15c × ($80,000 − $67,000) = $1,950/year ($75 per fortnight).
  • $100,000 income: 15c × ($100,000 − $67,000) = $4,950/year ($190 per fortnight).
  • $140,000 income: $8,700 + 17c × ($140,000 − $125,000) = $11,250/year ($433 per fortnight).
  • $200,000 income: 10% × $200,000 (top-bracket, whole-of-income) = $20,000/year ($769 per fortnight).

Use the main HECS repayment calculator for your exact figure and pay-cycle breakdown, or the salary lookup table for every salary from $60,000 to $250,000.

Old system vs new system — how much less you pay

SalaryOld (FY2024-25)New (FY2025-26)Saving
$60,000$600 (1.0%)$0$600
$80,000$3,200 (4.0%)$1,950$1,250
$100,000$5,500 (5.5%)$4,950$550
$120,000$9,000 (7.5%)$7,950$1,050
$150,000$13,500 (9.0%)$12,950$550
$180,000$18,000 (10.0%)$18,000$0 (top-bracket unchanged)

Old system used whole-of-income rates from ATO 2024-25 schedule. New system uses marginal formula from the Higher Education Legislation Amendment (20% Reduction of HELP Debts) Act 2025.

How repayment income is defined

Repayment income = taxable income + reportable super contributions + reportable fringe benefits + net investment losses + exempt foreign employment income. For most salaried employees with no investments or packaging, repayment income equals taxable income equals gross salary minus deductions. The definition did not change with the 2025 reforms.

Source and authority

Thresholds and rates published by the Australian Taxation Office (ato.gov.au) and Department of Education Study Assist program (studyassist.gov.au). Note: the ATO's own online calculator will not be updated to reflect the new marginal system until 1 July 2026. Until then, the authoritative government interactive tool is the Department of Education's HELP Debt Reduction and Repayment Estimator. This page is updated within 48 hours of each ATO annual adjustment.

Tips & Tricks

Pay off HECS faster — actionable tactics

Hand-picked strategies Australian graduates actually use. Each one can be implemented this financial year — no gimmicks, no affiliate links.

  1. 01

    Chuck a voluntary payment in before 1 June

    This one's the big one. Indexation hits on 1 June, and it only applies to whatever is sitting on your balance that day. If you transfer, say, $5,000 in the last week of May, indexation at 3.4% never touches that $5k — so you save around $170 in one go. I did this three years running and it's the single easiest win.

    Do this: Grab your PRN from myGov → ATO → Loan Accounts, then BPAY it. Do it 5 business days before 1 June — banks can be slow.

  2. 02

    Tick the HECS box on your TFN declaration

    Your employer only withholds extra tax for HECS if you tell them you have a debt. I've met grads who got smacked with a $9,000 bill at tax time because they never ticked the box — their payroll had no idea. Getting it withheld from each pay is way less painful than one brutal June invoice.

    Do this: Email payroll and say: "Please update my TFN declaration to indicate I have a HELP debt." Sorted next pay cycle.

  3. 03

    Add your fringe benefits and super to your income estimate

    The ATO uses "repayment income" — not just your salary. It adds back reportable fringe benefits (novated lease is the big one), reportable employer super, net investment losses, and exempt foreign income. A mate of mine on a $95k salary with a $12k novated lease tipped into the 15% bracket and was furious when the letter arrived.

    Do this: Check your last payment summary, grab the RFBA number, and add it to your gross before using the calculator.

  4. 04

    Don't part-pay your HECS before applying for a home loan

    This catches loads of people out. Banks only drop HECS from their serviceability calc when your balance is exactly zero. If you have $25k and pay $20k of it, the bank still assumes the full monthly commitment. Total waste unless you're clearing it completely — and if your balance is under $7–8k you might as well, since clearing it unlocks roughly $160 of borrowing capacity for every $1 of monthly HECS you remove.

    Do this: Balance under $8k and you're six months from a home loan? Clear it. Over $15k? Don't touch it — keep the cash for your deposit.

  5. 05

    If your investments beat indexation after tax, invest instead

    Indexation is capped at the lower of CPI or WPI — roughly 2.5–3.4% heading into 2026. A basic ASX/global ETF returning 7% pre-tax works out at about 4.8% after tax in the 32.5% bracket. Over 10 years, investing $20,000 instead of repaying it early can leave you $4,000–$7,000 ahead. HECS has no interest, just indexation — it's one of the cheapest "debts" you'll ever have.

    Do this: Run the numbers yourself in the Voluntary vs Invest calculator using your actual marginal tax rate before you decide.

  6. 06

    Don't expect salary sacrifice to shrink your HECS bill

    This is the most common bit of dodgy advice I hear. Yes, salary sacrificed super lowers your taxable income — but the ATO adds it back as "reportable super" when working out HECS. Novated leases reduce taxable income too, but they also create a Reportable Fringe Benefit (RFBA) that adds back in. Net effect: salary sacrifice is basically HECS-neutral. Use it for its super-tax benefits, not to dodge HECS.

    Do this: If someone tells you salary sacrifice will drop your HECS, ask them to show you the ATO page on repayment income. It won't.

  7. 07

    Moving overseas? Tell the ATO within 7 days

    Your HECS debt doesn't stay in Australia when you do. If you leave and earn above the AUD threshold ($67,000 for FY2025-26) you're still liable — and you have to lodge a worldwide income declaration each year. Skip it and you cop penalties plus interest. I've seen Aussies come back from London with five years of missed declarations and a $12k penalty bill on top.

    Do this: Before you fly, log into myGov → ATO → Update contact details → tell them you're moving. Lodge worldwide income by 31 October each year.

  8. 08

    Redirect your tax refund or bonus to HECS in May

    Lump-sum cash — your July tax refund, an annual bonus, EOFY commission — is the stuff that vanishes on random takeaway and holidays. If you route half of any big deposit straight to HECS in April or May, you wipe out a year of indexation on that chunk and you never miss the money because it was never in your everyday account.

    Do this: Set a rule with yourself: any single deposit over $2,000 in April or May gets split 50/50 — half to HECS via BPAY, half to your offset. Automate it if you can.

Frequently Asked Questions

What is the HECS threshold for FY2025-26?
The FY2025-26 compulsory HECS-HELP repayment threshold is $67,000 — a lift from $54,435 under the old 2024-25 system. Below $67,000 in repayment income, no compulsory repayment applies. The new marginal system then applies 15c per dollar over $67,000 up to $125,000, $8,700 + 17c per dollar over $125,000 up to $179,285, and 10% of total income at $179,286 and above.
What is the top HECS repayment rate?
The top rate is 10%, applied to repayment income of $179,286 and above (FY2025-26). At this bracket only, the rate reverts to whole-of-income — so an income of $200,000 generates a HECS repayment of $20,000 (10% of $200,000). Below $179,286 the marginal formula applies.
Do HECS thresholds change every year?
The thresholds in the new marginal system (nil / $67,000 / $125,000 / $179,286) are legislated and do not automatically index each year. Any future adjustment requires a legislated change. The ATO adjusts indexation rates annually but the bracket boundaries themselves are fixed until further legislation.
How do I pay less HECS legally under the new system?
Three levers: maximise deductible work expenses (reduces repayment income directly), stay below a bracket boundary if you're close to $125,000 or $179,286 (for top-bracket earners), and understand that salary sacrifice to super or novated leases usually does NOT help because those amounts are added back as reportable items for HECS purposes.
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