Sole trader tax rate
There isn’t one — you’re taxed at personal marginal rates.
There is no separate sole trader tax rate in Australia. Your business profit is added to your other income and taxed at the same individual marginal rates anyone else pays, plus the Medicare levy. Only companies pay a flat company tax rate — a sole trader never does.
This is why lowering taxable profit through legitimate deductions matters more than hunting for a “business rate” that doesn’t exist.
Worked example
Two people each end up with $75,000 of taxable income — one from a salary, one from sole trader profit after expenses. They pay exactly the same income tax. The source of the income doesn’t change the rate.
Common mistake
Searching for a flat “ABN tax rate” and assuming it’s lower than employee tax. It’s the same scale — what differs is that nobody withholds it for you, so you set it aside yourself.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Related terms
Marginal tax rate
The tax rate on your next dollar of income.
Sole trader
The simplest business structure — you and the business are one.
PAYG withholding vs PAYG instalments
One is tax you hold back for others; one is prepaying your own.
Tax deduction vs tax offset
A deduction lowers income taxed; an offset lowers tax owed.
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