Borrowing Power
The 2026 HELP repayment change: what it means for your tax return and your loan
7 min read · By Daniel Lagden · 25 October 2026
The short version
- From the 2025/26 income year HELP repayments are calculated only on income above the threshold, which is $67,000 for 2025/26 and $69,528 for 2026/27.
- At a repayment income of $120,000 the 2025/26 repayment is $1,050 a year lower than the 2024/25 rates charged on the same income. From $179,286 the law change itself makes no difference.
- Employees may have had less tax withheld and may be refunded the difference when they lodge their 2026 tax return, if they have no outstanding tax or other Commonwealth debts.
- The 20 per cent debt cut lowered balances but did not change the repayment, which is set by income.
- The saving lifts borrowing capacity a little. Do not plan on a refund as part of your deposit until it has landed.
Since 1 July 2025 your compulsory HELP repayment has been calculated only on the income above a threshold, instead of as a percentage of all of it. For most people that means a lower repayment from their 2026 tax return onwards, and a small improvement in the monthly commitment a lender sets against their income. The improvement is real but modest, and it is uneven: how much you gain depends on where your income sits.
Quick summary: the old system charged one rate on your whole repayment income, and that rate stepped up as your income crossed each band. The new system charges 15 cents in the dollar on the slice above $67,000 (2025/26), then 17 cents above $125,000, then 10 per cent of the whole amount from $179,286. Above that last line nothing changed, so for a higher earner the law change makes no difference.
What actually changed?
Under the old rules the ATO looked at your repayment income, found the band it sat in and applied that band's rate to every dollar. The ATO's own example for 2024/25 is a repayment income of $99,736, which sits in the 5.5 per cent band and produces a repayment of about $5,485. Step into the next band and the higher rate applied to the entire amount, not just the extra, which is why repayments jumped as income rose.
From 2025/26 the repayment is marginal. Nothing is payable up to the minimum repayment income. Above it you pay 15 cents for each dollar up to $125,000, then $8,700 plus 17 cents for each dollar over $125,000, and from $179,286 you pay 10 per cent of your total repayment income. For 2026/27 those lines move to $69,528, $129,717 and $186,051, and the base amount to $9,028. The ATO indexes them each year with average weekly earnings, so expect them to move again.
What counts as repayment income?
Not just your salary. The ATO adds together your taxable income, reportable fringe benefits, reportable super contributions, any total net investment loss including net rental losses, and exempt foreign employment income. Two of those matter to professionals. Salary sacrificed super is added back, so it does not reduce your repayment. And a rental loss from a negatively geared property is added back too, so that deduction lowers your tax but not your HELP repayment.
What will you pay now?
Here is the same income run through three sets of rates. The 2024/25 column is what the old flat rates charged. The other two columns use the ATO's marginal rates for 2025/26 and 2026/27. Because 2024/25 is last year's actual rates, the saving combines the law change with a year of indexation, so treat it as a guide rather than a measure of the law change alone. At $180,000 the law change itself makes no difference, which is why that row shows no saving. The lower 2026/27 figure there is indexation moving the bands.
| Repayment income | 2024/25 (old rates) | 2025/26 | 2026/27 | Saving, 2024/25 to 2025/26 |
|---|---|---|---|---|
| $80,000 | $3,200 | $1,950 | $1,571 | $1,250 |
| $100,000 | $5,500 | $4,950 | $4,571 | $550 |
| $120,000 | $9,000 | $7,950 | $7,571 | $1,050 |
| $150,000 | $13,500 | $12,950 | $12,476 | $550 |
| $180,000 | $18,000 | $18,000 | $17,576 | $0 |
| $200,000 | $20,000 | $20,000 | $20,000 | $0 |
The ATO's own worked example is a repayment income of $80,000 in 2025/26. The ATO says that under the old method the repayment would have been $2,800. Under the new method it is $1,950, about $32 extra in the pocket each fortnight for someone with one employer. The table above shows $3,200 for the old method because it uses 2024/25's actual rates, while the ATO's example applies the old method to 2025/26.
How does the 2026 tax return refund work?
Employers withhold using updated tax tables, so employees may have had less tax taken from each pay towards HELP. If more was withheld than your final repayment, the difference comes back when you lodge your 2026 tax return, provided you have no outstanding tax or other Commonwealth debts. If you pay tax in instalments, the change was not applied until 1 July 2026, and any extra you paid in 2025/26 is returned in your 2026 assessment on the same condition.
Does this lift your borrowing power?
A little. Most lenders count the compulsory repayment your income triggers, either as a deduction from your income or as a monthly commitment, rather than the balance. A lower repayment is a lower commitment. At a repayment income of $120,000 the 2025/26 saving of $1,050 is about $88 a month. At $100,000 it is about $46 a month. That is a modest lift, not a changed outcome, and from about $180,000 the law change makes no difference.
Two things to watch. Lenders update the repayment table inside their serviceability calculators on their own timetable, so ask which one yours is using before you assume the saving is counted. And the 20 per cent debt cut that applied to balances as at 1 June 2025 lowered what you owe but not what you repay each month, because the repayment is set by your income. It shortens the time to clear the debt. For most lenders it does not change what they assess, though a few treat small or nearly cleared balances differently, so ask.
What should you do before you apply?
- Work out your repayment income from your latest notice of assessment, including reportable super contributions and any net rental loss, not just your salary.
- Check that your employer is withholding on the updated tax tables. If you earn under about $179,000, the HELP part of your withholding should be lower than it was a year ago.
- Lodge your 2026 return if you have not, and clear any other tax or Commonwealth debt, because a refund is only paid when none is outstanding.
- Do not plan on a refund as part of your deposit or settlement costs until it has landed in your account.
- Tell your broker about your HELP debt up front and ask which repayment table the lender is using.
Current as at October 2026. Repayment thresholds and rates are set by government and indexed each year, and lender policy varies. The rates and examples here come from the ATO's published tables.
Run the numbers
Frequently asked questions
Did the 20 per cent cut reduce my HELP repayment?
No. The cut reduced balances that existed on 1 June 2025. Your compulsory repayment is calculated from your income, so it only fell because the repayment method changed. A lower balance means you finish repaying sooner.
What income do I need before I start repaying in 2026/27?
Your repayment income needs to be above $69,528. Below that the compulsory repayment is nil, up from $67,000 in 2025/26.
Does negative gearing reduce my HELP repayment?
No. Net rental losses are added back when the ATO works out your repayment income, so the deduction lowers your tax but not your HELP repayment.
Will I definitely get a refund?
Not necessarily. A refund only arises if more was withheld than your final compulsory repayment, and it is only paid if you have no outstanding tax or other Commonwealth debts. Your 2026 notice of assessment shows the result.
See what your HELP debt really costs your borrowing power
The effect depends on your income, your other debts and the lender you use. Send us your latest notice of assessment and we will show you how it looks across lenders before you apply.
Talk to us about your HELP debtGeneral information only. This article does not take your personal circumstances into account and is not credit or tax advice.
