HECS-HELP Repayment Thresholds Explained (FY2025-26)

TL;DR

If your HELP Repayment Income (HRI) for the 2025-26 income year is at or above $54,435, the ATO will require a compulsory repayment toward your HECS-HELP, FEE-HELP, VET Student Loan or SA-HELP debt. Repayment rates start at 1.0% and step up to 10.0% once your HRI passes $159,664. The legislated system is a "whole-of-income" model: cross a threshold and the entire HRI is taxed at that band's rate. The Federal Government has flagged a move to a marginal repayment system from 1 July 2025 — only the slice above $67,000 would be repayable — but until the legislation passes, the cliff-style ladder still applies.

Two practical points sit on top of that:

HRI is broader than your taxable income. It adds reportable fringe benefits, reportable employer super contributions, salary-sacrificed personal super, total net investment loss (negatively geared property), and exempt foreign employment income. Salary packaging that lowers your taxable income generally does not lower your HRI.
Indexation is now the lower of CPI and WPI, applied each 1 June. Voluntary repayments made before 1 June reduce the indexed base; repayments made after 1 June apply only to the post-indexation balance.

The HECS-HELP Repayment Calculator implements both the legislated ladder and the proposed marginal system so you can compare side by side.

How the HECS-HELP repayment thresholds actually work

The Australian Taxation Office publishes the HECS-HELP / Study and Training Loan repayment thresholds each year. For the 2025-26 income year the schedule is:

HRI band (AUD)	Compulsory rate
Below $54,435	0.0%
$54,435 – $62,850	1.0%
$62,851 – $66,620	2.0%
$66,621 – $70,618	2.5%
$70,619 – $74,855	3.0%
$74,856 – $79,346	3.5%
$79,347 – $84,107	4.0%
$84,108 – $89,154	4.5%
$89,155 – $94,503	5.0%
$94,504 – $100,174	5.5%
$100,175 – $106,185	6.0%
$106,186 – $112,556	6.5%
$112,557 – $119,309	7.0%
$119,310 – $126,467	7.5%
$126,468 – $134,056	8.0%
$134,057 – $142,100	8.5%
$142,101 – $150,626	9.0%
$150,627 – $159,663	9.5%
$159,664 and above	10.0%

Two features of the table catch most people out the first time they look at it.

The rate is applied to your whole HRI, not just the slice above the threshold. If your HRI lands at exactly $54,435, the compulsory repayment is 1.0% × $54,435 = $544.35. If a pay rise nudges you to $54,500, the repayment becomes $545. So far so smooth. But if a bigger move pushes you from $94,503 (5.0% band, repayment $4,725) to $94,504 (5.5% band, repayment $5,198), the repayment jumps by $472 for $1 of extra income. That is the "cliff" the proposed marginal system is designed to remove.

The ladder updates every year. Treasury and the ATO recalibrate the thresholds at the start of each financial year, broadly tracking wage growth. The figures above are FY2025-26; the FY2024-25 ladder started at $54,435 too, but the upper rungs were slightly different. Always reconfirm the bands at ato.gov.au before relying on a precise figure for tax planning.

What "HELP Repayment Income" includes

This is where the calculator and your payslip can disagree. HELP Repayment Income (HRI) is defined in the Higher Education Support Act 2003 and the Trade Support Loans Act 2014, and it is broader than the taxable income on your PAYG payment summary.

HRI = taxable income

reportable fringe benefits (grossed up at the type 2 factor of 1.8868)
reportable employer super contributions
salary-sacrificed personal super (a subset of the above for most employees)
total net investment loss (rental property losses, share margin loan interest, etc.)
exempt foreign employment income.

The intent is to treat all of these in the same way as ordinary salary for HELP purposes. A doctor working for a public hospital who packages $9,010 of meal entertainment plus $15,899 of living expenses can shave a meaningful amount of taxable income off their PAYG summary; the gross-up still ends up in their HRI. A negatively geared investor with a $20,000 rental loss reduces their taxable income by $20,000 — and adds $20,000 to their HRI. This single mechanic catches a lot of high-income borrowers off-guard.

Indexation: 1 June, lower of CPI and WPI

HELP balances are indexed once per year on 1 June. Before the 2024 reform, the rate was straight CPI (Consumer Price Index) for the year ending 31 March. CPI peaked at 7.1% on 1 June 2023 and that single year was the catalyst for the legislative change.

From the 2024 reform onward, indexation is the lower of CPI and WPI (the Wage Price Index, also published quarterly by the ABS) for the year ending 31 March. The change was applied retrospectively from 1 June 2023, generating an automatic credit on most balances during 2024.

Two practical implications:

Voluntary repayments before 1 June lower the indexed base. A $5,000 repayment made on 31 May at a 4% indexation rate saves you $200 of indexation; the same $5,000 paid on 2 June saves you nothing in that cycle.
Indexation only applies to the portion of the loan that has been outstanding for at least 11 months. Newly added unit fees from the most recent semester are ring-fenced from this year's indexation.

Official source

ATO — Study and training loans — repayment thresholds and rates — ato.gov.au/individuals-and-families/study-and-training-support-loans/study-and-training-loan-repayment-thresholds-and-rates
Treasury — Cheaper HECS and lower student debt (Budget 2024-25) — treasury.gov.au
Higher Education Support Act 2003 — Part 4-2 (HELP repayment) and Schedule 1A (the indexation formula).

These three are the only documents to rely on. The thresholds you see on bank or comparison websites are quoted from the ATO; if a figure on a third-party site disagrees with ato.gov.au, the ATO is right and the third-party page is stale.

Worked examples

The numbers below use the FY2025-26 thresholds. The compulsory repayment is calculated on the whole HRI, not just the slice above the threshold.

Example 1 — Graduate teacher, NSW public school, single income

Salary (Step 4 NSW Department of Education, 2025): $87,500
Reportable employer super (compulsory 11.5% SG, no extra): $0 (because compulsory SG is excluded from "reportable" — only voluntary salary-sacrificed amounts above SG count)
No rental property, no fringe benefits.
HRI = $87,500.

That lands in the 4.5% band ($84,108 – $89,154). Compulsory repayment = 4.5% × $87,500 = $3,937.50 for the year.

PAYG withholding would normally take that out across the year — roughly $151 per fortnight. If the teacher sticks with the legislated cliff system, an unexpected $5,000 winter relief allowance pushed onto the same payment summary could move HRI to $92,500 (5.0% band), bumping the repayment to $4,625 — a $687 jump for $5,000 of extra income (effective rate on the marginal $5,000 = 13.7%).

Under the proposed marginal system, only the slice above $67,000 is repayable. Repayment ≈ ($87,500 − $67,000) × 15% = $3,075 in the lowest marginal band. The cliff disappears; an extra $5,000 is taxed at the same 15% (or 17% in the higher band).

Example 2 — Dual-income couple, Melbourne, with a negatively geared investment property

Software engineer salary: $150,000 + 11.5% SG.
Personal salary sacrifice into super: $15,000 (above SG, so this is "reportable").
Reportable fringe benefits (NFP packaging): $0.
One investment property, net rental loss after depreciation: $18,000.
Taxable income = $150,000 − $15,000 (sal sac) − $18,000 (rental loss) = $117,000.
HRI = $117,000 + $15,000 + $18,000 = $150,000.

The taxable income on the PAYG summary ($117,000) lands in the 7.0% band, suggesting a $8,190 repayment. But the actual HRI ($150,000) lands in the 9.0% band, so the compulsory repayment is 9.0% × $150,000 = $13,500.

That is a $5,310 surprise at tax time relative to what the PAYG withholding has been collecting on the engineer's $117,000 PAYG figure. APRA-regulated lenders will also include the higher figure when assessing a future home loan, so the negative gearing strategy that looks attractive on the income tax line can squeeze borrowing capacity by 6 to 10 times the annual repayment, i.e. $30,000 to $50,000 less that the bank will lend.

The investment-property loss is taken from the Negative Gearing Calculator, and the salary-sacrifice impact comes from the Salary Sacrifice Super Calculator.

Example 3 — Doctor on $230,000 with NFP salary packaging

Public hospital salary (FBT-exempt employer): $230,000 gross.
Living expenses cap: $9,010 of meal entertainment + $15,899 of living expenses, salaried-packaged.
Concessional cap: $30,000 used in full as salary sacrifice into super, of which $26,450 is "reportable employer super" above SG.
No investment property.

Packaged amounts gross-up at 1.8868 (type 2): ($9,010 + $15,899) × 1.8868 = $46,977 of reportable fringe benefits.

Taxable income on the PAYG summary ≈ $230,000 − $24,909 (packaged amounts) − $26,450 (sal sac) = $178,641.

HRI = $178,641 + $46,977 (RFBA) + $26,450 (RESC) = $252,068.

Compulsory repayment = 10.0% × $252,068 = $25,206.

The packaged-living-expenses arrangement that saved roughly $7,500 of income tax has zero effect on HECS-HELP. The doctor faces a $25,000-plus repayment line at lodgement. Many junior doctors only discover this when their first ATO Notice of Assessment arrives. The fix is usually either (a) extra PAYG withholding via TFN declaration variation, or (b) parking enough of the salary into a separate account to cover the bill in October.

Common pitfalls

These are the recurring mistakes that show up in our reader emails on this topic.

Assuming salary packaging cuts your HECS-HELP bill. It does not. The whole point of HRI is to claw back the impact of packaging. If you are at a public hospital, charity or PBI and you package living expenses, your HECS-HELP repayment will be calculated on the gross-up, not on the post-package taxable income. Plan the cash flow accordingly.
Forgetting that PAYG withholding is an estimate. Your employer withholds based on your salary at that employer alone. If you have a second job, freelance income, an investment property loss, or any reportable fringe benefits or super, the year-end true-up at lodgement can be a five-figure surprise. If you know you have any of these, ask your employer to withhold extra each pay using the PAYG Withholding Variation TFN form.
Voluntary repayments after 1 June. The window to reduce the indexed base closes on 31 May. After 1 June your repayment lands on the post-indexation balance; the indexation has already been added. If you are planning a mid-year voluntary repayment, bring it forward to late May. The ATO can take a few business days to process a voluntary repayment, so aiming for the third or fourth week of May is the safer plan; leaving it until 30 May has caught more than one borrower out.
Assuming your tax agent has already factored it in. If you are paying for end-of-year tax preparation, ask the tax agent for a written breakdown of your HRI versus your taxable income. The two figures usually differ for anyone with super salary sacrifice, fringe benefits, a rental property or a second job. A quick before-and-after calculation in May means you can budget for any shortfall before lodgement.
Treating the cliff as a fact. The Australian Government has flagged a marginal system from 1 July 2025 — repayments only on the slice above $67,000, in marginal bands of 15% / 17%. The legislation must pass for that to take effect. Until then the cliff applies; once it passes, expect a credit run for the prior year.
Lender treatment of HECS-HELP. Most APRA-regulated lenders treat the annual compulsory repayment as a fixed expense in serviceability. The outstanding balance is not treated as a normal debt. So a $5,000 annual repayment can shrink borrowing capacity by $30,000 to $50,000. Some borrowers clear small balances before applying for a home loan; others let it sit and accept the lower borrowing capacity.
Ignoring the gross-up factor for fringe benefits. Type 2 (1.8868) is the factor that applies to most NFP packaging. Type 1 (2.0802) applies where the employer is entitled to a GST credit on the benefit. The ATO's online calculator at ato.gov.au will tell you which factor applies to your specific arrangement.
Double-counting compulsory SG. The 11.5% Superannuation Guarantee that your employer pays on top of your salary is not in HRI. Only the voluntary salary-sacrifice portion above SG counts as reportable employer super. Some borrowers add the entire SG amount to their HRI and panic; that is wrong.
Using last year's thresholds. The ATO updates the schedule each May or June. Your tax agent and any payroll system you use should refresh the thresholds before the new financial year starts on 1 July. Calculator pages on this site update their threshold tables on the same cadence; the "Updated" date at the top of the calculator page is the version you are looking at.

Two more situations worth flagging

Living overseas. Australian residents who move abroad are still required to report worldwide income to the ATO each year using the Overseas Travel Notification. The compulsory repayment applies in the same way as for a resident: HRI is calculated on Australian-equivalent dollars and the same threshold ladder applies. There is no overseas exemption. The ATO publishes the foreign-income reporting guide and the conversion methodology on its website.

Returning to study. New unit fees added during a semester are only added to your HELP balance once the census date passes. Anything added after 31 May is not subject to the 1 June indexation that year, but is subject to the next 1 June cycle if it remains outstanding for at least 11 months. So a Trimester 1 enrolment in a graduate diploma adds units in March; those units sit out the very next 1 June and are first indexed the year after.

Two HELP-style debts. A borrower can have a HECS-HELP debt, a FEE-HELP debt and a VET Student Loan simultaneously. They are pooled for the compulsory repayment calculation — the ATO treats them as one repayment-income trigger — but each carries its own balance and interacts independently with voluntary repayments. The calculator on this site treats them in the same pool, which is consistent with the ATO's Tax return instructions for the relevant labels (M1, M2 and the study and training loan label).

Why the cliff matters more than the headline rate

The legislated thresholds look like a smooth-ish curve when you plot them, but the cliffs are real. Modeling on Treasury's own Cheaper HECS explanatory memorandum showed that around 150,000 borrowers crossed a band each year as a result of routine pay rises and salary sacrifice changes, and the average lost-to-cliff amount was around $1,200 per cliff. The marginal system was designed to remove that. Until it passes:

if you are within $1,500 of the next band, a small voluntary repayment in May (which reduces your HRI by lowering the income-feed for the year) can sometimes pay for itself in band-jump avoidance;
conversely, accepting an October bonus that pushes you over a band is roughly equivalent to giving up about half the bonus to HECS-HELP plus marginal income tax. The numbers are not always intuitive — it can be worth running them in the calculator.

How to true up your withholding so October is not painful

For salaried employees, the simplest path is the PAYG Withholding Variation: lodge the form with your employer to ask for an extra dollar amount per pay to cover the HECS-HELP shortfall. The Variation only takes effect for the rest of the financial year, so the window to lodge is roughly July to April. Self-employed or contract workers can simply set aside the projected repayment in a separate offset or savings account and pay it at lodgement.

Related calculators

HECS-HELP Repayment Calculator — applies the FY2025-26 ladder and lets you toggle the proposed marginal system.
Salary Sacrifice Super Calculator — see how concessional contributions interact with HRI and how much tax you actually save after the HECS-HELP knock-on.
Second Job Tax Calculator — the second-employer "no tax-free threshold" trap that often pushes HRI into a higher band.
Negative Gearing Calculator — quantify the rental loss that gets added back to your HRI.
Division 293 Tax Calculator — the other repayment surprise for high-income borrowers, applied alongside HECS-HELP.

A worked indexation example, end-to-end

Suppose your opening HELP balance on 1 June 2026 is $32,000, of which $28,000 has been outstanding for at least 11 months and $4,000 is brand-new (Semester 1 2026). The ATO publishes the FY indexation rate from the lower of CPI and WPI for the year ending 31 March; assume that figure is 2.7%.

Indexation applied = 2.7% × $28,000 = $756. Closing balance after indexation = $28,000 + $756 + $4,000 = $32,756.

Now layer in the compulsory repayment. If your HRI for FY2025-26 was $89,000 (4.5% band), the compulsory repayment is 4.5% × $89,000 = $4,005. The ATO posts that repayment to your account after it processes your tax return — typically October to December for most lodgers — so the order of events is: 1 June indexation first, then the compulsory repayment is credited to the post-indexation balance later in the year.

Closing balance at 31 December 2026 = $32,756 − $4,005 = $28,751. If your employer has been collecting PAYG withholding for HECS-HELP each pay, that withholding will already have been swept against the calculated $4,005 at lodgement, so you will not generally have a separate cheque to write — unless your HRI grossed up because of fringe benefits, super or a rental loss as in Examples 2 and 3 above.

The thresholds, indexation rate and gross-up factors quoted above are the ATO-published numbers for the 2025-26 income year. The marginal-system reform is from the 2025-26 Federal Budget and remains subject to passage of the relevant amending Act. This article is general information based on the ATO and Treasury documents linked above and is not personal tax advice; talk to a registered tax agent for your specific situation.