Redundancy payout after tax: how much you actually keep in 2026–27
A genuine redundancy is tax free up to $13,598 plus $6,801 for every full year you worked. Most payouts never reach that limit.
Redundancies are in the headlines. In the first ten weeks of 2026, WiseTech Global, Atlassian and Telstra alone announced more than 4,000 job cuts between them (Will AI Take My Job). If it happens to you, the good news is that redundancy pay is taxed far more gently than your salary.
The tax-free part
For 2026–27, a genuine redundancy payment is tax free up to $13,598 plus $6,801 for each completed year of service (AGS). Only whole years count, so 7 years and 11 months counts as 7. If your end date is close to a work anniversary, it's worth asking about.
Anything above the limit
The excess is an employment termination payment (ETP). It's taxed at 32% if you're under 60, or 17% if you're 60 or over (both include Medicare), up to the $270,000 ETP cap. Above the cap it's taxed at the top rate. Unused annual leave and long service leave are paid out separately under their own rules.
What that looks like
| Salary and service | Package | Payout | Tax free | Tax (under 60) | You keep |
|---|---|---|---|---|---|
| $85,000, 3 yrs | NES minimum (7 wks) | $11,442 | $11,442 | $0 | $11,442 |
| $100,000, 5 yrs | NES minimum (10 wks) | $19,231 | $19,231 | $0 | $19,231 |
| $100,000, 8 yrs | 3 weeks a year (24 wks) | $46,154 | $46,154 | $0 | $46,154 |
| $130,000, 12 yrs | 4 weeks a year (48 wks) | $120,000 | $95,210 | $7,933 | $112,067 |
| $180,000, 15 yrs | 4 weeks a year (60 wks) | $207,692 | $115,613 | $29,465 | $178,227 |
Redundancy pay only, before leave payouts. NES minimum is the National Employment Standards scale for employers with 15 or more staff. "3 weeks a year" and "4 weeks a year" are example enhanced packages. Under-60 ETP rate of 32%.
Most redundancy packages come in under the tax-free limit, and you only start paying tax on the bigger, longer-service payouts.
Is it a genuine redundancy?
It has to be your employer abolishing the role and ending your employment, not you resigning, a contract ending, or being dismissed for performance. Volunteering for a redundancy when the role is being abolished still counts. If you're unsure, ask your employer how they're classifying it before you sign.
This is general information, not tax advice. A registered tax agent can check your exact figures.
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