Low Income Tax Offset (LITO): How It Can Lower Your Tax Bill
LITO is a non-refundable tax offset for Australian residents with taxable income below a threshold. Maximum offset is $700 for 2025-26. It reduces income tax payable. This calculator estimates your LITO based on taxable income.
FAQ
Q1: Who is eligible for LITO?
You must be an Australian resident for tax purposes and have taxable income below ~$66,667 (2025-26). You must be under age limits (typically under 65). You must lodge a tax return to claim it. The offset is non-refundable.
Q2: How is LITO calculated?
Income ≤ $37,500: full $700
$37,501 - $45,000: reduced by 5 cents per $1 above $37,500
$45,001 - $66,667: reduced by 1.5 cents per $1 above $45,000 (base $325 at $45k)
>$66,667: $0
Q3: How do I claim LITO?
Claim by lodging your individual tax return. The ATO automatically assesses eligibility. No separate form needed. The offset applies after calculating tax liability; it can reduce tax to zero but not below.
Q4: Is LITO means-tested on family income?
No, LITO is based on individual taxable income, not combined family income. Other offsets (e.g., Spouse Tax Offset, SAPTO) may consider household circumstances. If you have a low-income spouse, you might also qualify for the Low Income Spouse Tax Offset. LITO can be affected by certain government benefits.
Note: LITO amounts are indexed annually. This calculator uses FY 2024-25 values as an estimate for 2025-26. Verify the latest figures on the ATO website.