How to reduce your HECS-HELP repayment in 2025-26

How HECS-HELP repayments work in 2025-26

If you have a HECS-HELP debt, the ATO automatically calculates your compulsory repayment based on your repayment income (not just your salary) once it exceeds the minimum threshold. For 2025-26, the threshold is $54,435, and the repayment rate starts at 1% of your repayment income.

Here are the full 2025-26 repayment brackets:

Repayment income range	Repayment rate
Below $54,435	0%
$54,435 – $64,306	1%
$64,307 – $74,178	2%
$74,179 – $84,049	2.5%
$84,050 – $95,926	3%
$95,927 – $107,801	3.5%
$107,802 – $120,679	4%
$120,680 – $134,556	4.5%
$134,557 – $149,438	5%
$149,439 – $165,321	5.5%
$165,322 – $182,210	6%
$182,211 – $200,100	6.5%
$200,101 and above	7%

Your repayment income includes your taxable income plus any reportable fringe benefits amounts and reportable super contributions (like salary sacrifice). This means the more you earn, the more you repay – but there are ways to reduce the total.

Strategy 1: Reduce your repayment income with salary sacrifice

Salary sacrificing into super reduces your taxable income. Because your compulsory HECS repayment is based on repayment income, a lower taxable income can drop you into a lower repayment bracket – or even below the threshold.

Example:

• If your salary is $70,000 and you salary sacrifice $6,000 into super, your taxable income becomes $64,000. That’s below the $64,307 threshold for the 2% rate, so your repayment drops from 2% to 1%.
• Result: You save about $700 in compulsory HECS repayment that year.

But remember: reportable super contributions are added back into your repayment income calculation. So salary sacrifice only helps if it reduces your overall repayment income. In the example above, the $6,000 is added back, so your repayment income stays at $70,000 – no benefit for HECS. However, if your employer offers non-reportable salary sacrifice (e.g. for a car or parking), that can reduce your repayment income without being added back.

Check with your employer or payroll team about what counts as reportable.

Strategy 2: Claim all eligible work-related deductions

Every dollar you legitimately deduct from your taxable income reduces your repayment income. Common deductions for 2025-26:

• Home office expenses (if you work from home)
• Work-related travel (car, public transport)
• Self-education courses directly related to your current job
• Union or professional association fees
• Tools, equipment, and protective clothing
• Internet and phone usage (if work-related)

Example:

• Your salary is $80,000. After claiming $5,000 in work deductions, your taxable income is $75,000.
• Your repayment rate drops from 3% to 2.5% – saving about $375 in compulsory repayment.

Keep receipts and a logbook for at least 12 weeks if you claim car expenses.

Strategy 3: Make voluntary repayments before indexation

HECS debt is indexed on 1 June each year, using the Consumer Price Index (CPI). For 2025-26, the indexation rate is expected to be around 3.5% (based on current inflation forecasts). If you can afford it, making a voluntary repayment before 31 May reduces the amount that gets indexed.

Example:

• You owe $30,000. Indexation at 3.5% adds $1,050 to your debt.
• If you pay $5,000 before 31 May, only $25,000 gets indexed – adding $875 instead. You save $175 in future interest.

Voluntary repayments also reduce your compulsory repayment amount in future years because your debt balance is lower. Use our HECS repayment calculator to see how much you’d save.

Strategy 4: Check if you’re eligible for a HELP repayment waiver

If you’ve suffered a serious financial hardship (e.g. job loss, illness, or natural disaster), you may be able to apply for a compulsory repayment waiver. The ATO can defer your repayment if you can show that making it would cause you severe hardship.

This is not common, but it’s worth knowing about if your circumstances change unexpectedly. You’ll need to provide evidence of your financial situation.

Strategy 5: Avoid earning just above a bracket threshold

The repayment brackets are stepped. If your repayment income is just a few hundred dollars over a threshold, you might end up paying a higher percentage on your entire repayment income. This can cost you hundreds of extra dollars.

Example:

• Repayment income of $64,306: repayment = 1% of $64,306 = $643
• Repayment income of $64,307: repayment = 2% of $64,307 = $1,286
• That extra dollar costs you an extra $643 in compulsory repayment.

If you’re close to a threshold, consider salary sacrificing or making a deductible contribution to drop below it. But always check the numbers first – sometimes the bracket jump is worth it if your income is genuinely higher.

Final tip: Use the HECS repayment calculator

Before you make any decisions, plug your numbers into our HECS repayment calculator. You can see exactly how much you’ll owe each year based on your income, and test different scenarios like salary sacrifice or extra deductions. It’s the easiest way to plan your finances around your HELP debt.

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This is general information only, not financial advice.