On a salary, you rarely owe US expat taxes: Australia taxes that pay first, at higher rates than the US.
Australia taxes 2025-26 income from A$45,001 to A$135,000 at 30%. In dollars, most of that range falls in the US 22% or 24% brackets. You claim that Australian tax as a credit against your US tax on Form 1116. Super (superannuation, Australia’s workplace retirement savings) is less settled, since no article of the treaty defers US tax on it.
Updated · Sources
Australia’s 2025-26 income year
- 45%
- is the top Australian rate, charged on taxable income above A$190,000, where the US tops out at 37%.
- 12%
- is the Superannuation Guarantee rate employers pay into your super from July 1, 2025.
- July 1
- starts each Australian income year, so it never lines up with your US calendar year.
Tax rates are for Australian residents, before the Medicare levy.
Beyond your salary, three things shape your US return from Australia.
Your employer pays into super
The IRS has not issued guidance on how a super fund is classified for US tax. Your CPA has to choose a reporting position, and some positions bring US tax on contributions or growth.
You are self-employed
Since October 1, 2002, the US-Australia totalization agreement has exempted self-employed US citizens living in Australia from US self-employment tax. A totalization agreement decides which country’s social security system covers you. Without it, US self-employment tax would apply to your net self-employment earnings, even when the exclusion or the credit clears your income tax. Ask the SSA for a letter of exemption, then attach a copy to your US return every year.
You draw Social Security or an Age Pension
Only the US can tax the US Social Security you receive in Australia. Article 18(2) of the treaty gives that right to the paying country. Article 1(4) keeps it outside the saving clause, which otherwise lets the US tax its citizens as if the treaty did not exist. It works both ways: only Australia taxes the Age Pension, its government pension, when paid to a US citizen, wherever the citizen lives.
On a 160,000 salary, Australian tax takes a larger share than US tax, even before the Medicare levy.
Australian income tax
A$40,538
It averages 25.3% of taxable income.
Medicare levy
A$3,200
Australia charges 2% of taxable income on top of income tax.
US income tax
$30,998
It averages 19.4% of taxable income.
US tax still due
$0
The credit for Australian income tax is larger than the US tax it offsets.
Australian income tax uses the ATO’s 2025-26 resident rates: A$31,288 on the first A$135,000, and 37 cents for each dollar above it. The US figure applies the four 2026 brackets a single filer reaches, from 10% up to 24% on each dollar above $105,700. Neither amount is converted, so each is a share of 160,000 in its own currency. The last row compares income tax alone, leaving the levy out.
What does Australia tax on a temporary visa?
You are usually a temporary resident if you hold a temporary visa and your spouse, if any, is not an Australian citizen or permanent resident. Many Americans on work visas are temporary residents.
| Temporary resident | Other residents | |
|---|---|---|
| Pay for work in Australia | Taxed | Taxed |
| Pay for work done overseas | In certain cases, if earned while a temporary resident | Taxed |
| US interest and dividends | Not declared | Taxed |
| Gains on US shares | Not declared | Taxed |
The US taxes both groups on worldwide income. So income you do not declare in Australia pays its full US tax, with no Australian tax to credit against it.
Five mistakes to avoid on a US return from Australia.
Leaving super off Form 8938
Form 8938 counts foreign pensions, super included. A single filer living abroad files Form 8938 once foreign assets pass $200,000 at year end or $300,000 at their peak. Those thresholds apply only if you meet the bona fide residence or physical presence test.
Treating super as exempt from the FBAR
The FBAR’s exception for retirement plans covers only US plans, such as IRAs and 401(k)s. Whether a super account is itself an FBAR account is unsettled, so decide it with your CPA.
Ignoring the foreign trust question
Some advisers treat the part of your super built from your own contributions as a foreign grantor trust, which you are treated as owning. That view brings Forms 3520 and 3520-A. Rev. Proc. 2020-17 exempts certain tax-favored foreign retirement trusts from those forms, but the IRS has not said whether super qualifies.
Buying Australian managed funds
In US eyes, most Australian managed funds and ETFs are passive foreign investment companies (PFICs), because nearly all their income and assets are passive. Funds held inside super may be PFICs as well. Each such fund is taxed under the PFIC rules rather than as ordinary shares, and is generally reported on Form 8621.
Crediting the wrong Australian year
On the cash method, Form 1116 credits Australian tax in the US year you pay it. If you elect the accrual method, each Australian year’s tax generally counts in the calendar year in which that Australian year ends. Pick one method and keep to it, because the accrual choice binds later years. Either way, Form 1116 needs your Australian figures. You can lodge your own return until October 31, and a registered tax agent engaged by then can lodge later.
Who handles your US return while you live in Australia?
We provide US expat tax services to Americans in Australia, working beside the Australian tax agent who lodges your Australian return.
- We credit your Australian tax on Form 1116 in the US year it belongs to, on the paid or accrued method we agree with you.
- We report your super on the same basis every year, and list it with each Australian account on your FBAR and any Form 8938. The instant quote counts every account and fund before we start.
- We model the exclusion and the credit on your Australian pay, and you elect the exclusion only if it costs less.
- We size your US estimated payments for US income Australia does not tax.
- At no extra charge, we answer IRS or state notices on returns we prepared, including questions about your super.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
The US expat tax questions Americans in Australia ask most.
Are American expats double taxed?
Generally not on the same income, though an American living in Australia usually files both an Australian and a US return. Form 1116 lets you offset the US tax on Australian income with the Australian tax paid on it. Article 22 of the treaty, which relieves double taxation, applies to US citizens despite the treaty’s saving clause. US Social Security is taxed by the US alone, whereas Americans in Japan can be taxed on it by both countries.
Does Australia have a double tax agreement with the US?
Yes, the two countries signed an income tax convention at Sydney on August 6, 1982, in force since October 31, 1983. A protocol signed on September 27, 2001 amended it. Under Article 1(3), its saving clause, the US may tax citizens in Australia as though the treaty had never taken effect. Article 1(4) carves out the articles that still help citizens, among them Article 18(2) on Social Security and Article 22 on double taxation. Social security coverage is set by a separate totalization agreement, effective October 1, 2002.
How much is $100,000 a year taxed in Australia?
An Australian resident with A$100,000 of taxable income owes A$20,788 of income tax for 2025-26, or A$22,788 with the 2% Medicare levy. For 2026-27 the income tax falls to A$20,520, as the 16% rate drops to 15%. Offsets and the Medicare levy surcharge can change what you actually pay. An American can credit that income tax on Form 1116, where it usually exceeds the US tax due on the same salary. A Singapore resident pays about 5.65% on S$100,000 of chargeable income, so the credit rarely covers the US tax there.
Should I exclude my Australian salary instead of crediting its tax?
Usually not, since the credit for Australian tax already wipes out the US tax on a typical salary. Any Australian tax the credit cannot use this year carries to other years. With the foreign earned income exclusion, the Australian tax on excluded pay is lost for good. The choice is also sticky, since a revoked exclusion generally cannot be chosen again for 5 years. It tends to work better in low-tax countries such as Singapore.
What is the 10 year tax rule in Australia?
The 10 year rule usually means Australia’s tax treatment of investment bonds, a kind of life insurance investment. It is a narrow rule for those products. The US does not follow it, so the bond gets no special treatment on your US return. If the bond has a cash value, the FBAR treats it as a foreign account. Americans in the UK meet the same gap with ISAs, whose UK tax break does not reach their US return.
Sources
- US-Australia income tax convention (1982)
- Protocol to the US-Australia convention (2001)
- Australian Taxation Office, tax rates for Australian residents
- Australian Taxation Office, foreign and temporary residents
- Australian Taxation Office, super guarantee rates
- Australian Taxation Office, preparing your tax return
- Social Security Administration, Totalization Agreement with Australia
- US Treasury, Technical Explanation of the US-Australia convention
- IRS, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
- IRS, Publication 514, Foreign Tax Credit for Individuals
- IRS, Rev. Proc. 2025-32 (2026 inflation adjustments)
- IRS, Instructions for Form 8938
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- IRS, Rev. Proc. 2020-17 (exemption for tax-favored foreign trusts)
- IRAS, Individual income tax rates (tax residency and rates)
Reviewed and updated September 2026. General information, not advice for your situation.