Tax-Free Threshold With Two Jobs: Which to Claim?

General information only. This article doesn't take into account your objectives, financial situation or needs, and isn't financial, tax or credit advice. Consider whether it's appropriate for you and, where relevant, read the PDS and TMD and talk to a licensed financial adviser or registered tax agent. Figures were checked against official sources on the date shown and can change.

The short version

Most Australian residents can earn $18,200 a year before paying income tax. That's the tax-free threshold.
With two jobs at the same time, the ATO says you generally claim it from one payer only, usually the one that pays you the most.
Claiming it from both, when your total income is over $18,200, can mean too little tax is withheld and a tax bill after 30 June.
Already claimed it twice? Give your second employer a withholding declaration to stop. It's quick to fix.

Picking up a second job is common, especially for students and casual workers. Moneysmart says more than 1 in 5 employees in Australia are casual, and plenty of them juggle a few different roles.

Every new job comes with a TFN declaration, and on it is a question that causes a lot of end-of-year surprises: "Do you want to claim the tax-free threshold from this payer?" This guide explains what to answer when you have two jobs, why it matters, and what to do if you've already got it wrong.

What is the tax-free threshold?

The ATO says most Australian residents can claim the tax-free threshold on the first $18,200 of the income they earn in the income year. If you're a non-resident for the full year, you can't claim it, and working holiday makers answer no to the question. You choose whether to claim it on the TFN declaration you give each payer (including Centrelink).

Claiming it doesn't change how much tax you owe for the year. It only changes how much your employer takes out of each pay along the way. Your actual tax is worked out when you lodge your tax return, based on your total income from every source.

For 2026-27, Moneysmart lists these resident rates (not including the 2% Medicare levy): nil on the first $18,200, then 15c for each $1 from $18,201 to $45,000, then $4,020 plus 30c for each $1 over $45,000, up to $135,000.

Two jobs: which one claims the tax-free threshold?

The ATO's rule is short: if you have more than one payer at the same time, generally you only claim the tax-free threshold from one payer, and usually it's the payer who pays you the highest salary or wage.

For your other jobs, the ATO says that where you expect to earn above $18,200 from all sources, you should advise your other payers to withhold tax at a higher rate, which it calls the 'no tax-free threshold' rate.

In practice, on your TFN declaration:

Main job (usually the one that pays more): answer yes to claiming the tax-free threshold.
Second job: answer no, so it withholds tax at the higher rate.

This isn't extra tax. Your real tax bill is still worked out on your total income at tax time, and if more was withheld than you owe, the difference generally comes back to you as a refund when you lodge your return.

When can you claim it from both?

The ATO says that if you're certain your total income for the year from all your payers will be $18,200 or less, you can choose to claim the tax-free threshold from each payer. That can suit someone with a couple of very small jobs. But if your income later rises above $18,200, the ATO says you'll need to give one of your employers a withholding declaration to stop claiming it there. Hours often creep up, so keep an eye on your year-to-date pay.

Why claiming it twice can lead to a tax bill

The ATO calls claiming the tax-free threshold from multiple employers a common mistake. It says you may not have had enough tax withheld during the year if your total income is above $18,200 from all employers and you've claimed the threshold from more than one. You may then receive a tax bill to pay the difference, due as a lump sum at the end of the financial year.

Here's the logic. Each employer only knows what it pays you. If both apply the tax-free threshold, each one withholds as though its pay is all you earn. Added together, you can end up with much less tax withheld than you'll actually owe on your combined income.

Example (illustrative only): Mia earns $28,000 a year from a café job and $14,000 from weekend retail work, so $42,000 in total. Using Moneysmart's 2026-27 resident rates, the tax on $42,000 is 15c for each $1 over $18,200, which is $3,570 before the Medicare levy and any tax offsets.

If Mia claims the tax-free threshold at both jobs, each employer applies the threshold to its own pay. The retail job pays her less than $18,200, so it may withhold little or no tax at all, and the café job only withholds on the part of its pay above the threshold. Together, the tax withheld can fall well short of what she owes. The gap shows up as a tax bill when she lodges. If she claims it only at the café job and answers no at the retail job, the retail job withholds at the higher rate and her withholding is much more likely to cover her tax.

The numbers here are simplified to show the idea. Actual withholding depends on ATO tax tables, how often you're paid, offsets and the Medicare levy.

What counts towards the $18,200?

The ATO says any income you earn counts towards your tax-free threshold, whether it's from an employer, a government agency or work you do under an Australian business number (ABN). A few situations catch people out:

Government payments. The ATO notes that if you receive taxable government payments such as JobSeeker, Youth Allowance or Austudy, you are likely to be already claiming the tax-free threshold from that payment. So a new job on top of it would usually answer no.
ABN or side-hustle income. Income from work you do under an ABN isn't taxed by an employer at all, so it's easy to forget. It still counts towards your total income for the year.
Changing jobs. Changing jobs isn't the same as having two at once. The ATO says when your previous employer stops paying you, you no longer claim the threshold from them, and you can claim it from your new payer even if you claimed it from your previous employer.

Already claimed it from both jobs? How to fix it

The good news is this is easy to fix, and the earlier in the financial year you fix it, the smaller any bill.

Give your second employer a withholding declaration. The ATO says to let an employer know you'd like to stop applying the tax-free threshold by completing a Withholding declaration. You can do it online through ATO online services (with myGov linked to the ATO), then give it to your payer.
Ask for extra tax to be withheld. If you're worried you still won't have enough withheld, the ATO says you can ask your employer to withhold additional tax by entering into a written agreement with them.
Consider a withholding variation or PAYG instalments. The ATO also mentions prepaying tax through the PAYG instalments system, and in some cases lodging a PAYG withholding variation application. These are more involved, so a registered tax agent or the ATO can help you decide if they suit you.

If you've already had a few months of under-withholding, a simple safety net is to move a little from each pay into a separate savings account, so a bill at tax time doesn't land on a credit card. Our simple budget guide shows how to set up a separate bucket for it.

Don't forget your study loan

If you have a HECS-HELP or other study and training support loan, the ATO says that if you change or have multiple jobs during the year, you need to tell your employer about it. To reduce the chance of an unexpected bill, check each employer is withholding extra to cover your compulsory repayment. If they're not, the ATO says to complete a Withholding declaration so they do. Our HECS-HELP guide explains how compulsory repayments work.

At tax time

When you lodge your return, the ATO adds up income from all your jobs and compares the tax you owe with the tax withheld. Moneysmart says that if you're doing your own tax, you have until 31 October to lodge, and you can do it free with myTax through a myGov account linked to the ATO. Most employer information is pre-filled by late July.

If your income is around $70,000 or less, the ATO's free Tax Help program (July to October each year) can help you lodge. If your situation is more complicated, a registered tax agent can help. Check they're on the Tax Practitioners Board register first.

Starting out? Our first job money checklist covers the rest of the new-starter paperwork, including super and payslips.

Frequently asked questions

Should I claim the tax-free threshold on my second job?

Usually not. The ATO says that if you have more than one payer at the same time, you generally only claim the tax-free threshold from one, usually the one that pays you the highest salary or wage. If you expect to earn more than $18,200 from all sources, you should ask your other payers to withhold at the 'no tax-free threshold' rate.

Can I claim the tax-free threshold from both jobs?

Only if you're certain your total income for the year from all payers will be $18,200 or less. The ATO says that if your income later rises above $18,200, you'll need to give one of your employers a withholding declaration to stop claiming it there.

What happens if I claimed the tax-free threshold twice?

If your total income is above $18,200, the ATO says you may not have had enough tax withheld and may receive a tax bill for the difference, due as a lump sum at the end of the financial year. To fix it, give your second employer a withholding declaration saying you no longer want to claim the threshold from them.

I changed jobs. Can I claim the tax-free threshold at my new job?

Yes. The ATO says that when your previous employer stops paying you, you no longer claim the threshold from them, and you can claim it from your new payer even if you claimed it from your previous employer.

Does income from JobSeeker, Youth Allowance or an ABN count?

Yes. The ATO says any income from an employer, a government agency or work you do under an ABN counts towards your tax-free threshold. It also notes that if you get a taxable payment such as JobSeeker, Youth Allowance or Austudy, you are likely already claiming the threshold from that payment.

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Sources

Checked on 12 October 2026. Official sources are updated regularly, so follow the links for the latest figures.

Important information

This article provides general information only. It is not financial, tax, legal or credit advice and does not take into account your objectives, financial situation or needs. Consider whether it is appropriate for you, read the relevant PDS and TMD before acquiring any financial product, and consider seeking advice from a licensed financial adviser or registered tax agent. BARBAR is not a licensed financial adviser and does not recommend any particular financial product, fund or provider. Examples are illustrative only, not predictions or promises. Investing involves risk, including possible loss of capital, and past performance is not a reliable indicator of future performance. Rates, thresholds and rules change, so check the linked official sources for current information.

Tax-Free Threshold With Two Jobs: Which Job Should Claim It? (Australia)