Australian Redundancy Calculator 2026 — Tax-Free Amount, ETP & After-Tax Payout

Last updated: 4 May 2026 Reviewed by James O'Brien, CPA

When you are made redundant in Australia, part of your payout may be **tax-free** under the ATO's genuine redundancy provisions. For FY2025-26, the tax-free threshold is **$12,524 (base amount) plus $6,264 for each completed year of service**. An employee with 10 years of service has a tax-free threshold of $75,164. Any redundancy payment above this amount is classified as an Employment Termination Payment (ETP) and taxed at concessional rates — up to 30% for employees under 65, rather than the standard marginal rate of up to 47%. The Fair Work Act sets minimum redundancy pay based on years of service, ranging from 4 weeks' pay (1–2 years) to 16 weeks' pay (9+ years). Many employers, particularly larger organisations and those under enterprise agreements, pay above these minimums. Employees at or above the normal retirement age of 67 do not qualify for the tax-free genuine redundancy threshold — the entire payment is treated as an ETP. This calculator uses the 2025-26 ATO thresholds and ETP concessional rates to estimate your after-tax payout.

Gross Weekly Pay (A$) Before tax — use your ordinary time earnings per week

Completed Years of Service Complete years only — a partial year does not count for genuine redundancy

Your Age at Redundancy Tax treatment differs at or above normal retirement age (67)

Marginal Tax Rate (%) Your tax rate in the year of redundancy

Total Redundancy Payment —

Genuine Redundancy Tax-Free Amount —

Taxable Component (ETP) —

Estimated Tax on Taxable Component —

Estimated After-Tax Payout —

View Year-by-Year Breakdown

Real-World Examples — 2026

8 years service — $1,800/week gross

An employee aged 45 earning $1,800/week gross ($93,600/year, 30% marginal rate) with 8 completed years of service receives a total redundancy payment of 14 weeks' pay = $25,200. The genuine redundancy tax-free threshold is $12,524 + (8 × $6,264) = $62,636 — the entire $25,200 payment is below the threshold and is fully tax-free. After-tax payout: $25,200.

15 years service — $2,500/week, higher payment

A senior employee aged 52 earning $2,500/week ($130,000/year, 30% marginal rate) with 15 completed years of service receives 16 weeks' pay (the maximum under Fair Work Act) = $40,000. The tax-free threshold is $12,524 + (15 × $6,264) = $106,484 — the entire $40,000 is below the threshold and fully tax-free. If the employer pays 30 weeks' pay ($75,000), the excess above the threshold ($0 in this case, as $75,000 < $106,484) remains fully tax-free.

Frequently Asked Questions

How much redundancy pay am I entitled to in Australia?

The Fair Work Act sets minimum redundancy pay entitlements based on years of continuous service. The scale ranges from 4 weeks' pay for 1–2 years of service, up to 16 weeks' pay for 9 or more years of service. Employers with fewer than 15 employees may be exempt from the redundancy pay scheme. Your employment contract may provide more generous entitlements. Separately, the ATO's genuine redundancy tax-free threshold (currently $12,524 base + $6,264 per completed year) determines how much of your payment is tax-free.

What is the genuine redundancy tax-free threshold in Australia for 2025–26?

For the 2025–26 financial year, the ATO genuine redundancy tax-free limit is $12,524 (base amount) plus $6,264 for each complete year of service with the employer. For example, an employee with 10 years of service has a tax-free threshold of $12,524 + (10 × $6,264) = $75,164. Any redundancy payment above this threshold is an Employment Termination Payment (ETP) taxed at concessional rates.

What is an Employment Termination Payment (ETP)?

An Employment Termination Payment (ETP) is the portion of a redundancy or termination payment that exceeds the genuine redundancy tax-free threshold, or any payment that is not classified as genuine redundancy. ETPs are taxed at concessional rates: for those under 65, the first $245,000 (ETP cap for 2025–26) is taxed at a maximum of 30% (17% if your income plus ETP does not exceed $45,000). Amounts above the ETP cap are taxed at the top marginal rate of 47%.

Is redundancy pay paid as a lump sum in Australia?

Yes. Genuine redundancy payments are typically paid as a lump sum on or shortly after the termination date. The tax-free component does not appear in your assessable income. The taxable (ETP) component is subject to withholding tax by your employer, who will provide you with an ETP payment summary showing the tax withheld. You declare the ETP in your tax return, and any over- or under-withholding is reconciled with a tax assessment.

Does long service leave get paid out on redundancy?

Yes. If you have accrued long service leave, it must be paid out upon redundancy in most states and territories. Long service leave paid out on termination is taxed differently from genuine redundancy pay — it is generally taxed as ordinary income at your marginal rate, but with concessional treatment depending on when the leave was accrued. The redundancy calculator above does not include long service leave — add it separately using the marginal rate applicable to leave payouts.