Tax Trends for Employed Australians: 2022-23 Challenges and Insights

Australians Pay More in Tax Than They Gain in Wages, as Inflation and Policy Shifts Bite

The 2022–23 financial year, the first full one under Prime Minister Anthony Albanese’s leadership, left many employed Australians feeling squeezed. While incomes nudged up, the combination of rising taxes, stubborn inflation, and the quiet removal of a crucial tax offset meant many saw little to no real improvement in their financial well-being.

New figures from the Australian Taxation Office (ATO) paint a telling picture: average workers earned more than they did the previous year, but their tax bills rose even faster. The average net tax paid jumped by 4.2%, while income grew by just 2.6%. In real terms, most Australians went backwards.

Wage Gains, But Not Enough to Keep Up

Average taxable income rose to $74,240, up $1,913 (2.6%) from the prior year.
Men earned an average of $86,199, up just 2.2%.
Women’s average income was $62,046, but their earnings rose slightly faster, by 3.3%.

Despite these modest gains, they didn’t come close to outpacing the 6% inflation recorded during the same period. Add to that a noticeable rise in tax liabilities, and the net result was a hit to disposable incomes.

Average tax paid jumped to $23,562, an increase of $946 (4.2%).
Women, in particular, saw a 5.8% rise in tax paid—adding an average of $1,009 to their annual tax bill.
Men paid $1,000 more on average, a 3.7% increase, taking their average tax outgo to $28,206.

The Silent Blow: End of the LMITO

For many low- and middle-income Australians, the biggest invisible hit came from something they didn’t get this year—the Low- and Middle-Income Tax Offset (LMITO). Worth up to $1,080, this offset quietly disappeared before the 2022–23 financial year began.

Its removal had a tangible impact. Millions of workers—particularly women, who are overrepresented in these income bands—received smaller refunds or larger tax bills compared to previous years, despite earning similar wages.

Millionaires Pay Zero, Thanks to Smart Deductions

While average Australians saw their taxes rise, the country’s richest managed to legally pay none at all.

91 Australians earning over $1 million paid zero income tax in 2022–23.
Combined, they claimed $390 million in deductions, largely through:
- Charitable donations (19 individuals donated an average of $15.4 million each, totaling $291 million)
- Tax management costs, sometimes exceeding $50,000 per person

These figures highlight the ongoing inequity in the tax system, where wealthy individuals can use deductions to substantially reduce—or completely eliminate—their tax liabilities.

Property Investors Double Down on Negative Gearing

Another trend gaining momentum: landlords leveraging negative gearing to cut their tax bills.

Around 1.13 million landlords declared a net rental loss in 2022–23.
Median rental loss: $5,487
Average loss: $9,346

This surge in negative gearing occurred even as property prices cooled and rents rose. It allowed investors to offset rental losses against other income—further reducing their overall tax burden.

Where the Big Earners Live—and What They Do

The country’s highest taxable incomes remain concentrated in Sydney’s eastern harbour suburbs. Postcode 2027—covering Darling Point, Edgecliff, Rushcutters Bay, and Point Piper—had the highest average taxable income at $279,712.

Profession-wise, surgeons continued to dominate the earnings chart, with an average taxable income of $472,475.

A Snapshot of the Year: 2022–23 Income & Tax Data

Group	Avg. Income	Avg. Net Tax	Avg. Tax Increase	Notable Notes
All workers	$74,240	$23,562	+4.2%	LMITO gone; inflation offset wage gains
Women	$62,046	—	+5.8%	Disproportionately affected by offset removal
Men	$86,199	$28,206	+3.7%
Millionaires (91 individuals)	—	$0	—	Claimed $390M in deductions; paid no tax
Negatively geared landlords	—	—	—	1.13M claimed rental losses (avg. $9,346)

What It All Means

For most wage earners—especially those in the middle and lower brackets—the combination of higher taxes, rising living costs, and policy shifts like the end of the LMITO chipped away at financial stability.

Women were particularly hard-hit, both by the offset removal and by tax increases that outpaced their income gains. Meanwhile, Australia’s wealthiest continued to utilise the full spectrum of deductions and tax strategies to their advantage, even paying nothing in some cases.

The enduring popularity of negative gearing highlights how entrenched property is in the Australian tax equation—while the erosion of broad-based tax offsets like the LMITO leaves regular earners more exposed.

Policy Reflection

These figures come at a time when the government is considering tax reform and weighing how best to strike a balance between fiscal responsibility and tax equity. The current system’s outcomes have reignited debate over progressivity, deduction caps, and whether future policy should more directly support those impacted most by inflation and stagnant wage growth