Estimate Your Leave Payout
Frequently Asked Questions
How much tax is withheld from an annual leave payout?
The ATO sets maximum withholding rates for unused annual leave paid out on termination. For a genuine redundancy, invalidity, or early retirement scheme, the maximum withholding rate is 17% (15% income tax plus 2% Medicare levy). For any other termination, such as resignation or standard dismissal, the maximum withholding rate is 32% (30% plus 2% Medicare levy). If your marginal tax rate is lower than these rates, the lower rate applies instead.
Is leave loading included in an annual leave payout?
If your award or enterprise agreement provides for leave loading (commonly 17.5%), it is generally payable on your unused annual leave when your employment ends, in addition to the base leave payment. Check your specific award or agreement to confirm whether leave loading applies to your payout.
Is this calculator an accurate substitute for a tax return?
No. This calculator provides an estimate only, based on the ATO's published maximum withholding rates for unused leave payments. Your actual tax liability is determined when you lodge your tax return and depends on your total taxable income for the year. For advice specific to your situation, consult the Australian Taxation Office or a registered tax agent.
How Annual Leave Payouts Are Taxed in Australia
When your employment ends, any accrued but unused annual leave must be paid out at your current pay rate. This payment is taxable income, but the ATO applies specific withholding rates to unused leave payments rather than taxing them as regular salary.
Genuine Redundancy, Invalidity, or Early Retirement
If your employment ends due to genuine redundancy, invalidity, or under an early retirement scheme, unused annual leave is withheld at a maximum rate of 17% (comprising 15% income tax and 2% Medicare levy).
Resignation or Standard Termination
For any other reason your employment ends, including resignation or standard dismissal, unused annual leave is withheld at a maximum rate of 32% (comprising 30% income tax and 2% Medicare levy).
Marginal Rate Still Applies
These are maximum withholding rates set by the ATO for payroll purposes. If your actual marginal tax rate is lower, your employer should withhold at the lower rate. Your final tax liability is always reconciled when you lodge your annual tax return, based on your total taxable income for the year.
For further reading, see our guides on annual leave payout when you resign and annual leave and redundancy.