Is it better to contract or be employed in Australia?

At $100/hour against a salaried equivalent of $70/hour, 40 hours a week, contracting nets more than employment in Australia: a contractor keeps about $132,900 against an employee's $107,744, a difference of $25,156. The break-even rate — where the two are equal — is about $81/hour. Super is self-funded; Medicare levy.

What hourly rate do I need to charge in Australia?

To take home $100,000 a year after tax, health cover and unpaid time, you need roughly $101/hour, or a day rate around $806. That assumes $145,000 of gross revenue across 1440 billable hours.

Why is the contractor tax rate in Australia different from the employee rate?

A contractor usually pays both halves of social contributions where an employer would otherwise pay one, and often buys health cover privately. Here that works out at about 31% effective for a contractor against 26% for an employee. Super is self-funded; Medicare levy.

How accurate are these Australia figures?

The employee rate used here is 26%. The OECD's Taxing Wages series independently reports 23.5% of gross pay going to income tax plus employee social contributions for a single person on the average wage in 2025, and 19.4%–28.7% across earnings from two-thirds to two-thirds again above that. The rate here is checked against that range on every build and a figure outside it fails. It is still one blended rate where a real system has brackets, so treat it as an estimate: your actual liability depends on your regime, deductions and region.

Contracting · Australia

Contractor or employee in 🇦🇺 Australia?

At $100/hour, contracting nets more than employment — the break-even rate is about $81/hour.

Side by side at $100/hour

	Contractor	Employee
Gross	$192,000	$145,600
Tax	$57,600	$37,856
Health insurance	$1,500	—
Net	$132,900	$107,744
Effective rate	31%	26%

Super is self-funded; Medicare levy. Run your own rate in the interactive calculator.

To take home $100,000 a year

You need to charge about $101/hour (day rate $806), billing 1440 hours across the year for $145,000 of gross revenue.

Change the target in the required-rate calculator.

Checked against the OECD

This page uses an employee rate of 26%. The OECD's Taxing Wages series independently puts income tax plus employee social contributions at 23.5% of gross pay for a single person on the average wage in 2025 — and the full tax wedge, which adds what the employer pays on top, at 27.9% of total labour cost.

The rate above is checked on every build against the range OECD measures across earnings from two-thirds of the average wage to two-thirds again above it, and a figure outside that range fails the build. The two are not expected to match exactly: this site carries one blended rate where a real system has brackets.

Countries with a similar contracting premium

🇲🇾 Malaysia — +16% for contracting
🇹🇭 Thailand — +16% for contracting
🇵🇱 Poland — +16% for contracting
🇻🇳 Viet Nam — +17% for contracting

Questions

Is it better to contract or be employed in Australia?: At $100/hour against a salaried equivalent of $70/hour, 40 hours a week, contracting nets more than employment in Australia: a contractor keeps about $132,900 against an employee's $107,744, a difference of $25,156. The break-even rate — where the two are equal — is about $81/hour. Super is self-funded; Medicare levy.
What hourly rate do I need to charge in Australia?: To take home $100,000 a year after tax, health cover and unpaid time, you need roughly $101/hour, or a day rate around $806. That assumes $145,000 of gross revenue across 1440 billable hours.
Why is the contractor tax rate in Australia different from the employee rate?: A contractor usually pays both halves of social contributions where an employer would otherwise pay one, and often buys health cover privately. Here that works out at about 31% effective for a contractor against 26% for an employee. Super is self-funded; Medicare levy.
How accurate are these Australia figures?: The employee rate used here is 26%. The OECD's Taxing Wages series independently reports 23.5% of gross pay going to income tax plus employee social contributions for a single person on the average wage in 2025, and 19.4%–28.7% across earnings from two-thirds to two-thirds again above that. The rate here is checked against that range on every build and a figure outside it fails. It is still one blended rate where a real system has brackets, so treat it as an estimate: your actual liability depends on your regime, deductions and region.

Estimates for comparison, not tax advice. Effective rates are blended, not bracket-by-bracket except where noted, and every country has regimes and deductions a single rate cannot express.