Redundancy Payout Calculator Australia 2026-27
Most redundancy payouts are largely tax-free — see exactly what you keep.
Calculate tax on a genuine redundancy for 2026-27: the tax-free limit ($13,598 + $6,801 per completed year of service), ETP rates by age, the $270,000 cap, and flat 32% on unused leave — your net in hand, instantly.
Applies to genuine redundancies (position abolished, under Age Pension age). 2026-27 ATO figures.
How redundancy payouts are taxed
Three buckets, three treatments
A genuine redundancy package splits into: a tax-free amount (up to $13,598 + $6,801 per completed year of service — completely tax-free, not even reported as taxable income); an ETP (everything above the limit, taxed at concessional flat rates); and unused leave (annual and long service leave, taxed at a flat 32% maximum, separate from both).
Worked example
$60,000 redundancy after 5 completed years: tax-free limit $47,603, so $12,397 becomes an ETP taxed at 32% under age 60 ($3,967). Net in hand: $56,033 — an effective tax rate of just 6.6%.
Tax-free limit by years of service
| Completed years | Tax-free limit |
|---|---|
| 2 years | $27,200 |
| 5 years | $47,603 |
| 10 years | $81,608 |
| 15 years | $115,613 |
| 20 years | $149,618 |
Formula: $13,598 + ($6,801 × completed years). Only whole years count — 9 years and 11 months is 9. The limits are indexed each 1 July, so a payment delayed into a new financial year gets the higher limit.
How the amount above the tax-free limit is taxed
The excess over the tax-free limit is an employment termination payment. Within the $270,000 ETP cap (2026-27), it's taxed at 32% if you're under 60 on the payment day, or 17% at 60 and over (both include the 2% Medicare levy). Above the cap, 47% applies. Other ETPs received in the same year consume the cap first.
These are flat, final rates — a big ETP doesn't push your salary into higher brackets, and turning 60 before the payment date is worth 15 percentage points on the whole taxable slice.
Annual and long service leave: flat 32% maximum
Unused annual leave and long service leave paid out on a genuine redundancy are taxed at a maximum of 30% + 2% Medicare levy — a flat 32%, no matter how large the payout. They sit outside both the tax-free limit and the ETP cap.
If your actual marginal rate for the year ends up lower (common when you're out of work for months), the excess withheld comes back as a refund when you lodge — estimate it with the tax return calculator.
The conditions for the tax-free amount
The ATO requires: your position is genuinely abolished (not refilled by someone else); you're under Age Pension age (67) on the payment day; the arrangement is at arm's length (market-rate, no side deals); and there's no arranged re-employment. ATO-approved early retirement schemes get the same limits.
Resignation, dismissal for cause, and end of a fixed-term contract are not genuine redundancies — no tax-free amount, the whole payment is an ETP. Make sure the separation letter says redundancy.
❓ Frequently asked Frequently asked questions
How much of a redundancy payout is tax-free?
For 2026-27, $13,598 plus $6,801 for each completed year of service — a genuine redundancy after 8 years has a $68,006 tax-free limit. Only completed years count, and the payment must be a genuine redundancy.
How is the amount above the tax-free limit taxed?
It becomes an ETP. Up to the $270,000 cap it's taxed at 32% under 60, or 17% at 60 and over (including the Medicare levy). Above the cap, 47%.
How is unused annual leave taxed on redundancy?
At a flat 32% maximum, separate from the ETP and tax-free limit. If your marginal rate for the year turns out lower, the difference comes back at tax time.
What counts as a genuine redundancy?
Position genuinely abolished, you're under Age Pension age (67) at payment, and the arrangement is at arm's length. Resignations, dismissals for cause and contract completions don't qualify.
Can I put my redundancy payout into super?
Not by salary sacrifice — the payment relates to past service. You can contribute the cash personally: up to $130,000 non-concessional, or claim a deduction within the $32,500 concessional cap (carry-forward unused cap is powerful in a redundancy year).
Does the payout affect Centrelink waiting periods?
Yes — redundancy and leave payouts usually create an income-maintenance period before JobSeeker starts. The bigger the payout, the longer the wait. Factor it into how long the money must last.
Where these figures come from
Every limit and rate on this page is taken from the Australian Taxation Office (ATO) — the source of record for termination payments.
- Genuine redundancy payments & tax-free limit — ATO — Genuine redundancy payments.
- ETP cap and rates — ATO — Employment termination payments.
- How ETP components are taxed — ATO — ETP components.
- Redundancy entitlements — Fair Work Ombudsman — Redundancy.
Last checked: July 2026. The tax-free limit and ETP cap are indexed each 1 July and reviewed here when the ATO publishes them.
Select the question that matches where you are right now.
Your result shows the cash that actually reaches you after the three tax treatments — tax-free amount, ETP rates, and leave withholding — are applied to your package.
Check the employer's figures against this estimate before signing, and use the net number — not the headline package — for runway planning while you job-hunt.
Not legal or financial advice. Large or unusual packages (equity, bonuses in lieu, payment in lieu of notice) have extra rules — get the separation agreement reviewed.
Uses the ATO's 2026-27 indexed limits and ETP rates. All calculations run in your browser — nothing is stored or sent.
Three inputs dominate the outcome: completed years, your age on payment day, and whether the redundancy is genuine.
Each completed year adds $6,801 of tax-free capacity. Eleven months short of a year adds nothing — payment timing near an anniversary can matter thousands.
The ETP rate halves (32% → 17%) from age 60. Turning 60 between notice and payment date changes the tax on the entire taxable slice.
The whole tax-free amount depends on the position being abolished and you being under 67. The wording of the separation letter is worth checking carefully.
The rules are fixed, but timing and where the money goes next are yours to optimise.
If a service anniversary or your 60th birthday is close, the payment date matters — respectfully negotiating timing can save real money.
A redundancy year often has low taxable income — a deductible super contribution using carry-forward cap can offset the taxed portions.
Leave payouts land as income in one year. If the redundancy is late in the financial year, the flat 32% may exceed your true rate — the refund comes at tax time.
A redundancy touches your tax return, super and budget at once. Model the next steps.
Months without pay usually mean over-withholding — see what comes back.
Tax return calculator →See what the payout earns in a term deposit under the $250k guarantee.
Term deposit →