Estimate the tax saved by deducting an income protection premium you pay personally outside super, and its real after-tax cost.
Enter only the income protection part of a premium you paid yourself for a policy held outside super. Premiums for life, TPD and trauma cover are not deductible, and premiums deducted from your super balance are claimed by the fund, not by you. If one policy bundles income protection with other cover, use the income protection amount shown on the insurer's annual premium statement.
For the rate, add your marginal tax rate to the 2% Medicare levy. For the 2026–27 year the resident rates are 0% up to $18,200, 15% from $18,201 to $45,000, 30% from $45,001 to $135,000, 37% from $135,001 to $190,000 and 45% above $190,000. The 15% rate replaced 16% from 1 July 2026, so for 2025–26 returns the second bracket is 16%. Check the current rates on ato.gov.au.
Worked example (illustrative). A nurse earning $92,000 pays a $2,400 premium. Her rate is 30% + 2% = 32%. Tax saved = $2,400 × 32% = $768, so the cover really costs her $2,400 − $768 = $1,632 for the year.
Limits. The deduction only reduces tax you would otherwise pay, so it is worth less if your income falls into a lower bracket, and it does not account for the Medicare levy low-income reduction, offsets or the Medicare levy surcharge. Benefits paid under the policy are taxable income. See the tax deduction guide.
Costs, Cover Types and 2026 Rules
When income protection premiums are tax-deductible, what is not deductible, how bundled and super policies are treated, and the real after-tax cost worked out.
