The low income tax offset (LITO) is a tax offset that reduces the amount of tax you pay if you have a taxable income of less than $66,667. The amount of the LITO you can claim depends on your taxable income.
In 2023, the Low Income Tax Offset gives you up to $700 back if you earn less than $37,500. But if you earn more, it decreases by 5% for incomes up to $45,000 where it is reduced to $325 and then decreases by 1.5% for incomes above $45,000.
Who is eligible for Low Income Tax Offset?
To be eligible for the LITO, you must:
- Be an Australian resident for tax purposes.
- Not be a full-time student.
- Not be a member of the Reserve Force.
- Not be a non-resident trust.
How To Claim Low Income Tax Offset
You can claim the LITO when you lodge your tax return. You do not need to do anything to apply for it. The Australian Taxation Office (ATO) will calculate your LITO and apply it to your tax bill automatically.
LITO Formula
LITO calculation formula for the tax years 2021, 2022 and 2023 is the following:
| Income | Offset |
| 0 to $37,500 | $700 |
| $37,501 to $45,000 | $700 less 5% of [Income minus $37,500] |
| $45,001 to $66,666 | $325 less 1.5% of [Income minus $45,000] |
| $66,667+ | nil |
For example, if your taxable income is $40,000, you can claim a LITO of $575 ($700 - 0.05 x (40,000 - 37,500)).
LITO Calculator
Use our income tax calculator! It does all the LITO math for you. Just enter you annual income, give that "Calculate" button a tap, and find out if the Low Income Tax Offset is coming your way – plus, discover how much you could pocket. Give it a try and see what you might get back!
