Gross Income in Australia 2025: What It Means & Why It Matters

For most Australians, the term gross income is familiar—it pops up every pay cycle, on every tax return, and in nearly every loan application. Yet many don’t realise just how central it is to their financial health. In 2025, with new tax brackets, updated Centrelink thresholds, and evolving lending criteria, understanding your gross income isn’t just useful—it’s essential.

What Is Gross Income?

Gross income is your total income before any deductions. For individuals, that means your salary or wages before tax, superannuation, and other withholdings. For businesses, it’s total revenue before expenses. In Australia, the most common sources of gross income include:

• Employment income (salaries, wages, bonuses)
• Self-employment or business income
• Rental income
• Investment income (interest, dividends)
• Government benefits (before tax)

Your payslip might show both gross and net income—gross is the headline number, while net is what lands in your bank account after deductions.

How Gross Income Impacts Tax and Government Benefits in 2025

With the introduction of the 2025 Stage 3 tax cuts, Australia’s tax brackets have shifted, directly impacting how much tax you pay on your gross income. Here’s how the changes play out:

• Higher take-home pay for most workers: Many Australians are seeing more in their bank accounts each pay cycle, thanks to lower marginal tax rates on gross income up to $200,000.
• Centrelink and family benefit thresholds: Most means-tested government payments (like Family Tax Benefit, Youth Allowance, and JobSeeker) use your gross income to determine eligibility. Updated thresholds in July 2025 mean even small changes to your gross income can affect your benefits.
• Medicare levy and surcharges: These are calculated on your gross income, so it’s not just about tax—you could be liable for extra charges if your income tips over certain thresholds.

For example, if you earn $95,000 in gross income in 2025, you’ll fall into a new tax bracket compared to last year, potentially reducing your tax bill and impacting your eligibility for certain government payments.

Gross Income and Your Borrowing Power

Planning to buy a home, refinance, or take out a personal loan? Lenders rely heavily on your gross income to assess how much you can borrow. Here’s what matters in 2025:

• Loan serviceability: Banks use your gross income (not your net) to determine your ability to repay. Higher gross income usually means higher borrowing limits—but lenders also scrutinise your other debts and expenses.
• Updated lending criteria: In response to ongoing cost-of-living pressures, some lenders have tightened their serviceability calculations in 2025, requiring higher gross incomes for the same loan amounts compared to previous years.
• Self-employed Australians: Lenders typically assess the average of your gross business income over two years. Accurate reporting is more important than ever with recent ATO crackdowns on income under-reporting.

For instance, if your gross income is $120,000, you may qualify for a $700,000 home loan, but if rising living costs eat into your budget, lenders might offer less—even if your gross income hasn’t changed.

Budgeting and Financial Planning: Why Gross Income Is Your Starting Point

Knowing your gross income is the first step in effective budgeting. It sets the ceiling for what you can spend, save, and invest. Here’s how smart Aussies use their gross income to get ahead in 2025:

• Setting savings goals: Use your annual gross income as a reference point—experts recommend aiming to save 10–20% of your gross income each year, if possible.
• Superannuation contributions: Salary sacrificing into super is calculated from your gross income. With the concessional cap rising to $30,000 in 2025, this is a prime opportunity to boost retirement savings.
• Expense management: Many budgeting apps and financial planners now benchmark your expenses as a percentage of gross income, giving a clearer picture of where your money goes.

Real-world example: If you earn a gross salary of $80,000, targeting a $16,000 annual savings goal (20% of gross income) can keep your finances on track, regardless of changes in tax or living costs.

Conclusion

Gross income isn’t just a figure for your tax return—it’s the backbone of your financial decision-making, from borrowing to budgeting and beyond. With 2025’s financial landscape evolving, understanding your gross income is the smartest move you can make for your money.