The 2026-27 system charges a marginal rate up to $186,050, then switches to a flat 10% of your total repayment income above it. That switch sounds like the kind of thing that produces a cliff — earn one dollar more, owe thousands more.
It doesn't. Here is the repayment either side of the line, computed dollar by dollar:
| Repayment income | Compulsory repayment | Formula in force |
|---|---|---|
| $186,049 | $18,604.44 | $9,028 + 17c |
| $186,050 | $18,604.61 | $9,028 + 17c |
| $186,051 | $18,605.10 | 10% of total |
| $186,052 | $18,605.20 | 10% of total |
| $186,053 | $18,605.30 | 10% of total |
Crossing the boundary costs $0.49. The two formulas were designed to meet there, and they do — 17 cents in the dollar happens to reach exactly 10% of total income at that point.
A more useful way to look at it: if you earned $1,000 more than you do now, how much of it would go to HECS? That is the marginal rate, and it is the number that matters when you are deciding on overtime, a second job or a pay rise.
HECS taken from the next $1,000 of repayment income, 2026-27.
| Repayment income | HECS on the next $1,000 | Effective marginal rate |
|---|---|---|
| $70,000 | $150 | 15.0% |
| $80,000 | $150 | 15.0% |
| $90,000 | $150 | 15.0% |
| $100,000 | $150 | 15.0% |
| $110,000 | $150 | 15.0% |
| $120,000 | $150 | 15.0% |
| $130,000 | $170 | 17.0% |
| $140,000 | $170 | 17.0% |
| $150,000 | $170 | 17.0% |
| $160,000 | $170 | 17.0% |
| $170,000 | $170 | 17.0% |
| $180,000 | $170 | 17.0% |
| $190,000 | $100 | 10.0% |
| $200,000 | $100 | 10.0% |
The marginal rate falls at the top. Between $129,718 and $186,050 you hand over 17 cents of every extra dollar; above $186,051 you hand over 10 cents, because the repayment is a flat percentage of the whole. The heaviest marginal band in the HECS system is the middle one, not the top one.
That is the opposite of how income tax works, and it is why "I'm about to cross into the top HECS band" is not something to plan around. If you are going to worry about a band, worry about $129,718, where the rate steps from 15c to 17c.
This page is about HECS only. Your total marginal rate also includes income tax and the Medicare levy, which are set separately — and at the time of writing the ATO had not yet published resident income tax rates for 2026-27, so we don't combine them here rather than guess at them.
The near-perfect join is not a coincidence, and it is worth understanding because it tells you something about how the system was designed.
In the 17c band, the repayment is $9,028 plus 17 cents on everything above $129,717. As income rises, that total climbs faster than income does, so the repayment as a share of income keeps creeping up. The whole-of-income rule caps that creep at 10%. The switchover point is simply the income where the marginal formula first reaches 10% of the total — solve $9,028 + 0.17 × (x − $129,717) = 0.10x and you get $186,051, which is exactly where the ATO table switches.
So the two rules are two descriptions of the same curve at that point, which is why the step is $0.49 rather than thousands. Below the boundary the marginal formula gives the smaller number; above it, the 10% cap does.
The practical consequence: your HECS repayment can never exceed 10% of your repayment income, at any income, under this system. That is a hard ceiling, and it is the single most reassuring fact about the marginal rules that almost nobody states plainly.
People are right to be wary of thresholds in general; they are just wary of the wrong one. Under the old HECS system, before 1 July 2025, the fear was justified: the repayment was a percentage of your entire income, and crossing a band boundary re-priced every dollar you earned. Moving from the bottom of one band to the top of the one below it really could cost more than the pay rise.
The 2025-26 reform replaced that with the marginal structure priced out above, and in doing so removed the cliffs. If you have read older advice about "watch out for the HECS threshold", that advice was written for a system that no longer exists.
What can still bite you is not a cliff but an addition: things that push your repayment income above your salary without you noticing. Reportable fringe benefits are the big one, because they are grossed up by 1.8868 before they are counted — packaging $15,900 adds $30,000 to the income HECS looks at. We priced that out separately, because it is the one place where a decision that looks purely beneficial quietly raises your repayment.
| Repayment income | What happens | Marginal rate from here |
|---|---|---|
| Up to $69,528 | No compulsory repayment | Nil |
| $69,529 | Repayments begin | 15c in the dollar |
| $129,718 | Rate steps up — the only increase in the system | 17c in the dollar |
| $186,051 | Switches to 10% of total income | 10c in the dollar |
Four bands, one rate increase, no cliffs. You can check any income against the repayment calculator, or read the full table at every income.
Every figure on this page is computed at build time by the same engine that powers the calculators on this site — nothing is typed in by hand, so the tables cannot drift away from the tools. The engine is checked against the ATO's published thresholds by a golden test suite that fails the build if any figure moves unexpectedly.
HECS repayment at every income — the full 2026-27 table