US Citizens Working in Australia
See what you actually take home after US and Australia taxes — whether you're already working abroad or planning a move.
Here's what matters most for US citizens working in Australia:
- •Australia has progressive income tax rates up to 45%
- •FEIE can exclude up to ~$126,500 from US taxation if you meet the physical presence test
- •Medicare levy adds 2% for most residents (higher for high earners)
- •US-Australia tax treaty helps prevent double taxation
Who taxes you?
As a US citizen working in Australia, you're subject to taxation by both countries. The US taxes citizens on worldwide income, but the Foreign Earned Income Exclusion (FEIE) can exclude up to approximately $126,500 of foreign earned income if you meet the 330-day physical presence test. Australia taxes residents on Australian-sourced income with progressive rates up to 45%. A Medicare levy of 2% (or higher for high earners) applies to most residents. The US-Australia tax treaty provides foreign tax credits to prevent double taxation.
Common pitfalls
- Australian tax rates are high, with top marginal rate of 45%
- Medicare levy adds 2% (or more for high earners) on top of income tax
- Not meeting the 330-day physical presence test disqualifies you from FEIE
- State tax obligations may persist if you maintain US state residency
- Currency fluctuations between USD and AUD can impact your effective income
Frequently asked questions
Yes. US citizens must file US tax returns regardless of where they live. However, you may not owe US taxes if your income is below the FEIE threshold and you meet the physical presence test.
Australia has a progressive income tax system with rates from 0% to 45%. A Medicare levy of 2% applies to most residents (higher for high earners). You can claim foreign tax credits on your US return to offset taxes paid to Australia.
Generally no. The US-Australia tax treaty and foreign tax credits help prevent double taxation. You'll typically pay the higher of the two tax rates, not both.
The Medicare levy is a tax that helps fund Australia's public healthcare system. It's typically 2% of taxable income, but can be higher for high earners who don't have private health insurance.
Official resources
Primary sources:
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