From the 2025-26 income year, HELP (formerly HECS) repayments use a marginal rate system instead of the old flat-percentage thresholds. Under the previous system, crossing a repayment threshold by even one dollar meant the higher rate applied to your entire repayment income — creating harsh cliff effects. The new system works like income tax brackets: each rate tier only applies to the income within that band.
This change was introduced as part of the 2024 Universities Accord response and makes repayments significantly more predictable. You will never face a situation where a small pay rise costs you thousands in additional HELP repayments.
The 2025-26 HELP repayment schedule uses the following marginal rate tiers:
Because this is a marginal system, your effective repayment rate is always lower than the top tier you fall into — just like your effective income tax rate is lower than your marginal tax rate.
Your employer deducts estimated HELP repayments from your pay each pay cycle, based on the income you are expected to earn over the full year. This withholding is shown on your payslip alongside regular tax withholding. At the end of the financial year, the ATO reconciles the actual amount owed against what was withheld through your tax return.
For someone earning $90,000 with a HELP debt, the compulsory repayment under the marginal system is applied only to the portion of income above $67,000. This translates to a noticeable but manageable reduction in monthly take-home pay — far less dramatic than the old system where the rate applied to the full $90,000.
A common question is whether salary sacrificing into super can reduce HELP repayments. The short answer is no. The ATO calculates HELP repayment income using a formula that includes taxable income plus reportable employer super contributions (RESC), reportable fringe benefits, and net investment losses.
When you salary sacrifice, the sacrificed amount appears as RESC on your income statement and gets added back for HELP purposes. This means your HELP repayment income stays roughly the same regardless of how much you sacrifice. The salary sacrifice still provides a regular income tax benefit — you just cannot use it to avoid HELP repayments.
You can make voluntary HELP repayments at any time through the ATO. These payments reduce your outstanding balance and are separate from the compulsory repayments withheld from your pay. Key considerations:
For most people, the decision comes down to comparing CPI indexation (which has averaged around 2.5-3% historically but spiked above 7% in 2022-23) against the return you could earn by investing the money elsewhere. If you are debt-averse and have no higher-interest liabilities, voluntary repayments can provide peace of mind even if they are not strictly optimal.
For 2025-26, no compulsory repayment is required until your repayment income exceeds $67,000. Below this threshold your repayment rate is 0%. Repayment income includes taxable income plus any net investment losses, reportable fringe benefits, and reportable employer super contributions.
The previous system used flat percentage rates applied to your entire income once you crossed a threshold — creating cliff effects where earning one extra dollar could increase your repayment by thousands. The new marginal system (from 2025-26) applies the repayment rate only to income above each threshold, similar to how income tax brackets work. This eliminates the cliffs and makes repayments more predictable.
No. Salary sacrifice into super creates reportable employer super contributions (RESC), which are added back when calculating your HELP repayment income. The ATO specifically designed this rule to prevent people from using salary sacrifice to avoid HELP repayments.
It depends on your situation. HELP debt is indexed annually to the Consumer Price Index (CPI), not a commercial interest rate. In low-inflation years this means the debt grows slowly. However, in high-inflation years (like 2022-23 at 7.1%), the indexation can be significant. Voluntary repayments reduce the balance that gets indexed, but the money cannot be withdrawn once paid. If you have higher-interest debts (credit cards, personal loans), paying those first is usually better.
