Running your own trade business gives you more control over your income, but it also means you are responsible for your own tax, GST and superannuation arrangements.
The good news is that there is no special “ABN tax” for tradies. If you operate as a sole trader, your net business profit is generally added to your other taxable income and taxed at individual income tax rates.
So how much tax does a tradie actually pay?
It depends mainly on your taxable income after allowable deductions, your GST position and whether you have other income or tax obligations.
How Much Tax Does a Tradie Pay?
For the 2026–27 financial year, Australian resident individual tax rates are:
| Taxable income | Tax rate |
|---|---|
| $0–$18,200 | 0% |
| $18,201–$45,000 | 15% |
| $45,001–$135,000 | 30% |
| $135,001–$190,000 | 37% |
| Over $190,000 | 45% |
The Medicare Levy is generally an additional 2%, although exemptions, reductions and other circumstances can affect the amount payable.
For example, if your trade business earns $140,000 and you have $35,000 of legitimate business deductions, your taxable business profit is approximately $105,000.
For a resident taxpayer with no other income, offsets or special circumstances, that would produce approximately $22,020 in income tax plus $2,100 Medicare Levy, or about $24,120 altogether.
The important point is that you are taxed on profit, not turnover.
Tax Examples for Tradies
Here is a rough guide to what tax can look like on different levels of taxable income for 2026–27:
| Taxable income | Income tax | Medicare Levy | Approx. total |
| $60,000 | $6,420 | $1,200 | $7,620 |
| $80,000 | $14,520 | $1,600 | $16,120 |
| $100,000 | $20,520 | $2,000 | $22,520 |
| $120,000 | $26,520 | $2,400 | $28,920 |
| $150,000 | $35,520 | $3,000 | $38,520 |
| $200,000 | $54,620 | $4,000 | $58,620 |
These are illustrative figures only and do not account for tax offsets, HELP debts, private health insurance adjustments or other individual circumstances.
What Deductions Can a Tradie Claim?
The easiest way to reduce taxable business profit is to make sure you claim every legitimate business expense you are entitled to claim.
Common deductions can include:
- Tools and equipment — tools and other business assets may be immediately deductible or depreciated depending on the asset, its cost and the rules applying in the relevant income year.
- Vehicle expenses — business-use fuel, servicing, insurance, registration and depreciation may be deductible where the vehicle is used for business. Different methods apply depending on the circumstances.
- Subcontractors — genuine business-related contractor costs can generally be deductible, but contractor classification, withholding, superannuation and other obligations may also need to be considered.
- Insurance — business-related policies such as public liability and tool insurance may be deductible where they relate to earning business income.
- Phone and internet — the business-use portion may be deductible where you can support the percentage claimed.
- Professional fees — accounting, bookkeeping and tax-agent fees relating to your business are generally deductible.
- Licences, registrations and training — some work-related licences, registrations and training costs may be deductible where they relate to your current income-earning activities.
Our Can I Claim Tools on Tax? guide explains the rules around tools, depreciation and work-related equipment in more detail.
What About GST?
GST is separate from income tax.
If your GST turnover reaches $75,000 or more, you generally need to register for GST. Once registered, you generally charge GST on taxable supplies and claim eligible GST credits on business purchases.
You then report your GST through your Business Activity Statement (BAS).
GST registration does not mean you pay an additional 10% tax on your profits. GST is generally collected from customers and then accounted for to the ATO, less eligible GST credits.
Your GST reporting period depends on your circumstances. Quarterly reporting is common for small businesses, but monthly and annual arrangements can also apply.
PAYG Instalments: Paying Tax During the Year
One of the biggest surprises for new tradies is PAYG instalments.
Instead of waiting until your annual tax return to pay all of your income tax, the ATO may require you to make instalments during the year toward your expected tax bill.
The ATO can automatically enter an individual into PAYG instalments when the relevant income and tax thresholds are met. Current ATO guidance includes instalment income of at least $4,000, tax payable on the latest assessment of at least $1,000 and estimated tax of at least $500.
Standard quarterly instalment dates are generally 21 October, 21 January, 21 April and 21 July.
This can create a cash-flow squeeze because you may be paying your previous year’s tax assessment while also making instalments toward the following year’s tax.
That is why setting aside money throughout the year is so important.
A percentage such as 25–30% of business receipts can be a useful starting point for some tradies, but it is only a guide. Your actual requirement depends on taxable profit, GST, PAYG instalments and your personal tax position.
Do Tradies Have to Pay Super?
If you are a sole trader, you generally do not have to pay superannuation guarantee contributions to yourself.
You can, however, choose to make personal super contributions, including concessional contributions that may provide a tax deduction if the relevant requirements are met.
For 2026–27, the standard concessional contribution cap is $30,000. Unused concessional cap amounts may generally be carried forward for up to five years where your total super balance was below $500,000 at the previous 30 June.
For example, a tradie on a 30% marginal tax rate who makes a $10,000 deductible concessional contribution could reduce personal income tax by about $3,000, while the fund generally pays 15% tax on the concessional contribution.
That creates an approximate $1,500 tax difference, before considering the individual’s wider circumstances and contribution rules.
Can a Tradie Claim Their Ute on Tax?
Potentially, yes.
If you use a ute or other vehicle for business, you may be able to claim the business-use portion of eligible running costs.
For 2026–27, the cents-per-kilometre method uses a rate of 91 cents per kilometre, with a maximum of 5,000 business kilometres per car for the income year.
The logbook method instead uses a business-use percentage supported by a valid logbook. A logbook must generally be maintained for a continuous 12-week period, and can generally remain valid for up to five years if your circumstances do not materially change.
Which method produces the better result depends on your actual business kilometres and vehicle costs. It should be calculated rather than assumed.
ALSO READ: The tradie’s guide for claiming tax on ute
Sole Trader or Company?
Many tradies start as sole traders because the structure is simple and inexpensive to operate.
As profits grow, however, a company may become worth considering for tax, asset protection, administration and long-term planning reasons.
An eligible company that qualifies as a base rate entity can generally pay company tax at 25%, but that does not mean the owner simply pays 25% tax on everything they earn. How profits are retained or paid to shareholders can create additional tax considerations, including dividends and Division 7A issues.
There is no universal “best” profit level at which every tradie should incorporate.
The right structure depends on how much profit you retain, how much you need personally, your other income, compliance costs, asset protection needs and your long-term plans.
Record Keeping: Where Tradies Get Into Trouble
Good records make tax time easier and help support your deductions.
Keep records such as:
- sales invoices
- business purchase receipts
- bank statements
- BAS records
- vehicle records
- depreciation information
- records supporting any business-use percentage.
For the logbook method, the 12-week logbook is particularly important. Good digital record keeping can also make BAS and tax preparation much easier.
The Bottom Line
So, how much tax does a tradie pay?
There is no single answer.
A sole trader is generally taxed on net business profit, not turnover. Your actual tax bill depends on your taxable income, deductions, Medicare Levy, other income and personal circumstances.
Then there is GST, PAYG instalments, vehicle costs and superannuation to manage alongside your annual tax return.
The best approach is not to wait until tax time to find out what you owe.
At KSH TAX, we work with Perth tradies and self-employed contractors to manage tax, BAS, deductions, bookkeeping and business structure throughout the year.
Book a free tradie tax consultation with us or call 08 6285 8110.
