Working Two Jobs Tax Free Threshold Mistake Australia 2026 Guide

Why You May Owe Tax & How to Fix It Before EOFY

Working Two Jobs? You Could Be Overpaying Tax Later

If you’re working two jobs in Australia and end up owing money at tax time, the issue is usually not your income — it’s how your tax is set up.

One of the most common mistakes is claiming the tax-free threshold from more than one employer.

While this increases your take-home pay during the year, it often leads to a surprise tax bill when you lodge your return.

What Is the Tax-Free Threshold in Australia?

The tax-free threshold is the amount you can earn before paying income tax.

For the 2026 financial year, the threshold is $18,200.

Important:
This applies to your total income, not each job separately.

What Is the Working Two Jobs Tax Free Threshold Mistake?

When you start a job, you complete a Tax File Number (TFN) declaration.

You are asked:
“Do you want to claim the tax-free threshold from this payer?”

• Yes No tax on first $18,200
• No Tax from first dollar

The Mistake:

If you select “Yes” for multiple jobs:

• Both employers reduce your tax withholding
• Less tax is deducted overall
• You unknowingly underpay tax throughout the year

Result: You owe money to the ATO at tax time

Why This Mistake Leads to a Tax Bill

Australia uses a progressive tax system, meaning your total income determines your tax rate.

Example:

• Job 1 income: $45,000
• Job 2 income: $30,000
• Total income: $75,000

Each employer calculates tax separately, but the ATO calculates tax on the full $75,000.

Because insufficient tax was withheld during the year, you must pay the difference.

Additional Factors That Increase Your Tax Bill

HELP / HECS Debt

If you have a study loan:

• Repayments are based on combined income
• If not declared to all employers no withholding occurs
• ATO adds repayment at tax time larger tax bill

Medicare Levy

• Typically 2% of taxable income
• Calculated on total income
• Can increase your final tax payable

How to Fix the Tax-Free Threshold Mistake

If you’ve made this mistake, don’t worry — it can be fixed.

Step 1: Choose Your Main Job

• Select the job that:
• Pays the most
• Is most consistent

Step 2: Update Your TFN Declaration

Submit a new TFN declaration to your second employer:

Select “No” for claiming the tax-free threshold

Step 3: Check Your Payslips

After updating:

Confirm that more tax is being withheld

Step 4: Request Extra Tax Withholding (Optional)

If you’ve already underpaid:

Ask your employer to withhold additional tax
Helps reduce or avoid a tax bill

Step 5: Review Your Tax Position

Use a tax calculator or speak with a professional to:

Estimate your tax
Adjust withholding early

Common Mistakes to Avoid

• Claiming threshold on multiple jobs
• Ignoring income from a second job
• Not declaring HELP/HECS debt
• Waiting until tax time to act

These mistakes often lead to unexpected tax debt

Correct vs Incorrect Setup

Quick Checklist Before EOFY

• Claim tax-free threshold from only one employer
• Update TFN declarations if needed
• Declare HELP/HECS to all employers
• Monitor your payslips regularly
• Keep a small tax savings buffer
• Take action early

Frequently Asked Questions

Can I claim the tax-free threshold on two jobs?

No. You should only claim it from one employer at a time.

Why do I owe tax when working two jobs?

Because not enough tax is withheld when your income is split across employers.

Which job should I claim it from?

Your main or highest-paying job.

Is my second job taxed more?

No — it is simply taxed from the first dollar earned.

Can I fix this mistake during the year?

Yes. You can submit a new TFN declaration at any time.

Final Thoughts

Working multiple jobs can boost your income — but without the correct tax setup, it can also lead to unexpected tax bills.

The key is simple:
Plan your tax properly so you don’t overpay or underpay.

Contact Supertax

Need help fixing your tax setup or reducing your tax legally?

Supertax is here to help you stay compliant and save tax the right way.

Website: https://supertax.com.au/

• Suite 1, 7 Bridge St, Werribee VIC 3030
• (03) 7074 8818
• info@supertax.com.au

This article contains general information only and does not take your personal circumstances into account. Tax and superannuation rules change, and some measures discussed may be subject to legislation. Speak with a registered tax agent before acting.