The payslip from a second job looks punishing: tax withheld from the first dollar, at a rate that feels far above what your main job pays. The money does leave your pay, but it's withholding, an estimate paid toward your eventual bill, not the bill itself. The bill is calculated once a year, on your total income, at the same marginal rates as everyone else. See marginal vs effective tax rates for the general version of this confusion.
Why the second payslip looks worse
Australia's PAYG withholding lets you claim the $18,200 tax-free threshold from one payer at a time, normally the one who pays you the most. That payer withholds nothing until your pay passes about $363 a week. Every other payer withholds at the "no tax-free threshold" rate: tax from the first dollar.
This isn't a penalty; it's arithmetic. Your second job's income sits on top of your first job's income, so its dollars are taxed at your marginal rate, not from zero again. Withholding from the first dollar approximates that. If both payers gave you the tax-free threshold, you'd be enjoying $36,400 of tax-free income all year that the law only gives you once, and the difference would arrive later as a tax bill.
Worked example (FY 2026–27)
Main job $60,000, weekend job $15,000, total $75,000:
| Amount | |
|---|---|
| Tax + Medicare levy on $60,000 alone | $9,620 |
| Tax + Medicare levy on $75,000 combined | $14,520 |
| Extra tax attributable to the second job | $4,900 |
| Second job income kept after tax | $10,100 |
The second job's $15,000 is taxed at the marginal rate the combined income lands in, about 33% here, exactly what those dollars would have been taxed if your main employer had paid them as overtime instead. Two jobs, one job with a raise: same total income, same total tax. Every worked example the ATO publishes on multiple jobs reconciles the same way: the withheld amounts are credited against the calculated tax, and the difference is refunded or billed.
Getting the withholding right during the year
- Normal case: claim the threshold from the higher-paying job (tick it on that TFN declaration), don't claim it from the second. Expect a refund-ish outcome at tax time.
- Total income under $18,200: you can claim the threshold from every payer, there's no tax to protect against.
- Changing jobs (not overlapping): you can claim the threshold from the new employer straight away even though the old one also applied it earlier in the year, they're not paying you at the same time.
- Consistently over- or under-withheld: lodge a PAYG withholding variation with the ATO to tune the rate, rather than banking a big refund or copping a bill each year.
One thing a second job can move: income-tested obligations. More income means more HECS repayment, check the HECS calculator if you have a debt, since employer withholding for study loans is also per-payer and a second job is a classic cause of a HECS shortfall at tax time.
Frequently asked questions
Should I claim the tax-free threshold from both employers?
Only if you're confident your total income from all sources will stay at or below $18,200 for the year. Claim it twice while earning more, and both employers under-withhold: that money isn't saved tax, it's a bill waiting in your assessment. If your income rises mid-year, give one employer a withholding declaration to stop claiming it there.
Sources
Figures on this page come from the following primary sources. The date is when we last checked the page against the source.
- Multiple jobs or change of job (tax-free threshold) (ATO), checked 25 August 2026.
- Tax rates for Australian residents (ATO), checked 27 July 2026.
Related
Tax brackets 2026-27: the rates your combined income faces, and why the bracket myth is wrong. Take-home pay calculator: what any extra income is worth after tax. HECS at tax time: why a second job can leave a HELP bill too.
Figures current as at 25 August 2026. Withholding rules verified against the ATO's multiple-jobs guidance (dated 5 June 2026); worked example computed from FY 2026–27 rates per our methodology. General information only, not financial advice.