How Second Job Tax Rates Work in Australia

If you work a second job, you’re not alone. Data from the Australian Bureau of Statistics showed that in March 2025 there were 963,100 Aussies working multiple jobs. 

Having more than one job provides the opportunity to increase your income and gain new skills. However, it’s important to be aware that taxation on a second job is generally higher. 

This article will explain how the second job tax rate works, and provide information about the tax-free threshold. Understanding this aspect of Australian tax law can help you decide whether working a second job is worth it from a financial standpoint.

First of all, what is the tax-free threshold?

The tax-free threshold is the amount of income you can earn before you need to pay tax (currently $18,200 per financial year). When you claim the tax-free threshold from your employer, less tax is withheld from your pay throughout the year.

Can you claim the tax-free threshold on two jobs?

No, you can only claim the tax-free threshold from one employer at a time. For any second (or subsequent) job, your employer is required to withhold tax at a higher rate to help ensure you don’t end up with a giant tax bill at the end of the financial year.

Most people claim the tax-free threshold from the employer that pays the highest salary or wage.

If you have multiple jobs and your total combined income exceeds the tax-free threshold ($18,200), you’ll still need to pay tax on your overall earnings—at rates set by the Australian Taxation Office (ATO).

Let’s take a closer look at the tax implications of working more than one job:

How much is the tax-free threshold for a second job?

There’s no separate threshold for a second job—it’s the same $18,200 per financial year for all your income sources combined. You can only claim the tax‑free threshold from one employer at a time (typically the higher-paying job). 

Imagine that in your first job, you earn $18,000 annually. You decide to take on a second job to help boost your income. However, if you earn more than $200 in this second job, you’ll be liable to pay income tax on the combined income above $18,200 according to the ATO individual income tax rates for 2024-2025:

Note: these rates do not account for the Medicare levy, which is 2% of your taxable income.

Using the tax brackets above, let’s look at another example of how a second job could increase the tax you owe. Say that your first job pays $35,000 annually. Knowing that you’ve already crossed the tax-free threshold, you take on a second job to help boost your earnings. In your second job you earn over $10,000.

When you do so, you end up sending yourself into a higher tax bracket because your combined total annual income now exceeds $45,000. Taking into consideration the higher tax amount on a second job, you may find that a significant portion of your second income is taxed at a higher rate—currently 32.5% for income between $45,001 and $120,000.

This doesn’t mean a second job isn’t worthwhile—but it’s important to understand how your total income affects your tax liability, and plan accordingly. A useful tool you can use is the QuickBooks free income tax calculator which can estimate your taxable income from both of your jobs.

Example: Sally’s two jobs and tax withholding

Sally works part-time in independent publishing, earning $35,000 per year before tax. To help cover living expenses, she also drives for Uber on weekends, earning an additional $10,400 annually (about $200 per week).

Because Sally claims the tax-free threshold from her main employer, less tax is withheld from her $35,000 salary. However, her Uber income is taxed from the first dollar, at the higher  second job tax rate.

Here's a simplified look at how her earnings and tax differ with and without a second job:

What this means for Sally:

• On her first job, Sally pays minimal tax because she’s under the $45,000 threshold.
• When she adds a second job, her total income crosses into the 32.5% tax bracket, so Uber withholds a higher rate (around 32.5¢ per dollar earned).
• Although Sally earns more overall, the tax amount for her second job is higher, so she needs to plan for a larger tax bill at tax time—or ensure Uber withholds enough.

Second job tax rate vs first job tax rate

If you’re earning income from more than one job, it’s important to understand how each job is taxed differently—even if the hourly rate or salary is the same. The key difference lies in whether you claim the tax-free threshold, which affects how much tax is withheld from your pay.

Here’s a side-by-side comparison to help clarify how the tax treatment differs between your first and second job:

How to claim the tax-free threshold for more than one job

If you have more than one job, you can only claim the tax-free threshold from one employer at a time (usually the one paying you the highest income). This helps ensure the correct amount of tax is withheld across both jobs and reduces your chances of owing tax at the end of the financial year.

To claim the tax-free threshold from your chosen employer:

• Complete a tax file number (TFN) declaration form. 
• Answer Question 8 carefully—this asks, “Do you want to claim the tax-free threshold from this payer?”
• Select “Yes” for your main job (usually the one where you earn the most).
• Select “No” for any secondary jobs—this ensures tax is withheld from the first dollar earned.

Once submitted, your employer will use this information to calculate how much tax to withhold from your pay. If you’re unsure which employer should apply the threshold, speak with a tax professional or use the ATO’s online tax withheld calculator.

Changes to the way taxes are withheld

The tax-free threshold affects how tax is withheld if you have more than one employer, or if you earn additional income as a sole trader. Let’s take a closer look:

How taxes are withheld by sole traders

If your second job is as a self-employed sole trader or freelancer, the tax-free threshold still applies. However, taxes are handled differently compared to traditional employment.

As a sole trader, you're responsible for reporting your income and paying tax yourself, since no employer withholds tax on your behalf. The tax rates for sole traders are the same as for individual taxpayers, meaning you're entitled to the $18,200 tax-free threshold.

However, if your total income (from all sources) exceeds $18,200, you'll need to pay tax on the amount above that threshold. You usually claim the tax-free threshold from your primary employer, not your sole trader income. Instead, your business income is assessed when you lodge your tax return—or through PAYG instalments (if you're required to make them) throughout the year.

How taxes are withheld if you have two employers or a second job

If you're employed by someone else, your employer is required to withhold tax from your pay. But what happens if you have two employers—or receive a government allowance alongside part-time work?

In these cases, you can only claim the tax-free threshold from one employer or payer—typically the one that pays you the most. This helps ensure that the correct amount of tax is withheld across your total income.

Your second employer (or Centrelink, if you receive a taxable benefit) is then required to withhold tax at the "no tax-free threshold" rate. This means tax is withheld from the first dollar you earn from that source—at a higher rate than your primary job.

This withholding method helps reduce the risk of a tax debt at the end of the financial year by ensuring enough tax is collected as you earn.

Withholding tax variations

If too much tax is withheld from your pay during the year, you’ll get a refund after filing your tax return. To avoid this, you can track your income and submit a withholding declaration once you cross the tax-free threshold. This lets your payer adjust the tax withheld.

A pay-as-you-go (PAYG) system might be a better alternative. If your employer is withholding too much, you can apply for a PAYG withholding variation. The ATO will review your income and set a new withholding rate, which your employer will use going forward. This helps align your tax withheld with your actual tax liability.

You should only apply for a withholding variation if you’re confident about your income and can prove the current withholding is unfair. It’s not meant for experimenting with lower rates.

Tips to consider when claiming the tax-free threshold

The ATO considers your total taxable income across all jobs when calculating how much tax you owe. That means income from both your primary and secondary jobs is combined. To avoid an unexpected bill at tax time, it’s important to understand how the tax rate for a 2nd job works—and consider the following tips when deciding whether to claim the tax-free threshold:

Set money aside

It’s definitely worth setting aside money regularly (for the purpose of covering your tax bill) if you decide to get a second job. If you’re doing a side gig as a freelancer or sole trader, you can use the tax brackets to determine how much money you should be setting aside each week or month. Just remember that your tax will be calculated from your total taxable income, including both jobs.

Consider the implications of tax deductions

While you may be able to claim significant tax deductions, particularly tax deductions for sole traders, it’s best to not consider these when you’re setting aside your tax. That way, you might actually get a pleasant surprise come June 30 when your tax is calculated. You should account for your deductions at the end of the financial year (EOFY) as a potential refund, instead of relying on them when making your quarterly payments. Check our end of financial year guide to see the EOFY deadlines.

Only claim the tax-free threshold from one employer

If you’re an employee for both of your jobs, your employers should automatically withhold funds. Just remember to not tick the tax-free threshold on both jobs. Also keep in mind that the 2nd job tax rate will be higher.  

Seek professional advice

If you’re confused about your taxable income, we recommend reading our guide to income tax and speaking with a trusted accountant who can better explain how the various tax brackets work in Australia. You can also use QuickBooks accounting software to track how much you earn throughout the year so that you can better estimate your year-end tax payable.

Find a ProAdvisor near you to get advice from an accounting professional. 

Is it worth having a second job in Australia?

A second job can boost your income, but it’s important to factor in the 2nd job tax rate, which is typically higher. While a second job can still be financially worthwhile, make sure the extra income outweighs the additional tax and time commitments.

It’s particularly important to be mindful of your tax obligations if your additional source of income comes from being a sole trader. Using QuickBooks accounting software for self-employed sole traders, freelancers, and contractors is a great way to ensure the income from your second job is tax ready. With some forward planning and the right tools, managing the tax on your second job can be simple and stress-free.