The taxable income is the balance of assessable income less allowable deductions. The tax payable is calculated on the taxable income as per the tax rates below. Some mistakenly think that as you move into a higher tax bracket, all of your earnings are taxed at the higher tax rate. Nevertheless, using the chart below if your income was $ 85000, only $ 5k my be taxed at 38percentage not the full $ 85k. The above rates do not include the Medicare levy of 5percentage, that is subject to income thresholds.