Redundancy Tax Calculator
Estimate the Australian tax treatment of a genuine redundancy payment, splitting it into a tax-free component and a taxable balance.
Your results
The taxable component is taxed concessionally as an employment termination payment, capped by the ETP cap, not shown here.
Calculation breakdown
- Tax-free limit
- Tax-free limit = base amount + (per-year amount × completed years of service)
- Split
- Tax-free component = min(payment, tax-free limit); remainder is taxable
Worked example
With 6 years of service and a $40,000 redundancy payment, using a base of $12,524 and $6,264 per year gives a tax-free limit of about $50,108, meaning the whole $40,000 payment could be tax-free.
Assumptions
- Base and per-year tax-free limit amounts are editable because the ATO indexes them annually — confirm the current figures.
- Only applies to genuine redundancy or early retirement scheme payments, not resignations.
- Does not model the ETP cap on the taxable component's concessional tax rate.
Sources
How this calculator works
Enter your total redundancy payment, years of service and the current tax-free limit components to estimate how much of your genuine redundancy payment is tax-free and how much is taxed as an employment termination payment. The tax-free limit base and per-year amounts are editable inputs since they are indexed annually by the ATO.
Rates sourced from the Australian Taxation Office for the 2026–27 financial year. Last reviewed 01/07/2026.
Frequently asked questions
Is all of a redundancy payment tax-free?
No, only a genuine redundancy payment up to the ATO tax-free limit is exempt; amounts above that are taxed as an employment termination payment.
Why are the tax-free limit figures editable?
The ATO indexes the base amount and per-year-of-service amount annually, so they are exposed as inputs to keep results accurate.
Does this apply to voluntary resignation?
No, the tax-free treatment modelled here applies only to genuine redundancy or early retirement scheme payments, not resignations.
Rates and thresholds are configured for the 2026–27 Australian financial year and should be reviewed when government settings change.
Actual entitlements can depend on your award, enterprise agreement, contract, employment status and individual circumstances.