HECS-HELP Repayment Thresholds 2025-26: When Do You Start Repaying?

From 1 July 2025, you must begin making compulsory HECS-HELP repayments once your repayment income exceeds $54,435 per year. Repayment income is your taxable income plus any total net investment losses, reportable fringe benefits, and certain other amounts — it's slightly broader than your standard taxable income.

Repayments are made through the tax system. Your employer withholds additional tax based on your income once they know you have a HELP debt. When you lodge your tax return, the ATO calculates your compulsory repayment and reconciles any over- or under-withholding.

Use our HECS-HELP Repayment Calculator to see exactly how much you'll repay based on your income and debt balance.

The compulsory repayment is calculated as a percentage of your repayment income. The rates for 2025-26 are:

• Below $54,435 — Nil (no repayment)
• $54,435 to $62,850 — 1.0%
• $62,851 to $66,620 — 2.0%
• $66,621 to $70,618 — 2.5%
• $70,619 to $74,855 — 3.0%
• $74,856 to $79,347 — 3.5%
• $79,348 to $84,107 — 4.0%
• $84,108 to $88,878 — 4.5%
• $88,879 to $94,694 — 5.0%
• $94,695 to $100,519 — 5.5%
• $100,520 to $106,539 — 6.0%
• $106,540 to $112,929 — 6.5%
• $112,930 to $119,769 — 7.0%
• $119,770 to $127,073 — 7.5%
• $127,074 to $134,997 — 8.0%
• $134,998 to $143,166 — 8.5%
• $143,167 to $151,756 — 9.0%
• $151,757 to $160,991 — 9.5%
• $160,992 and above — 10.0%

Note: the repayment applies to your entire income at the applicable rate — it is not a marginal system. If you earn $54,436, you repay 1% of $54,436 ($544), not just 1% of $1.

HECS-HELP debts are indexed each year on 1 June to maintain their real value. Historically, indexation was based purely on CPI — which led to the controversial 7.1% indexation applied in June 2023 and 4.7% in June 2024, adding thousands of dollars to debts overnight.

From 1 June 2025, a legislative change capped indexation at the lower of CPI or the Wage Price Index (WPI). For June 2025, this resulted in an indexation rate of approximately 2.4% — significantly lower than it would have been under the old system.

Additionally, the government legislated a one-off reduction applied in January 2025: all HELP debts outstanding at 1 June 2023 received a 3% reduction, and at 1 June 2024 received a further reduction. This partially offset the high indexation applied in those years.

Going forward, the lower-of-CPI-or-WPI cap is permanent, providing more predictable growth in HELP debt balances.

Before the recent indexation changes, making voluntary repayments above the compulsory amount was a common financial strategy to reduce debt before the June indexation date. With the 10% bonus for voluntary repayments abolished in 2017, and indexation now lower, the calculus has changed.

Voluntary repayments make sense when:

• Your savings rate elsewhere (e.g., in a high-interest account) is lower than the HELP indexation rate
• You're approaching the end of your repayment period and want to clear the debt sooner
• You have a specific financial goal (e.g., home loan application) that benefits from reduced HELP balance

With HELP indexation now capped at roughly 2-3%, high-interest savings accounts and term deposits offering 4-5% make keeping your money in savings and making only compulsory repayments the mathematically preferred option for most people.

Voluntary payments must be at least $500 and are applied in full to your debt balance. They are not tax-deductible.

You can also use the Savings Mate HECS Calculator to model how voluntary repayments and indexation affect your total debt over time.

What happens if my income drops below the threshold after I've started repaying?
If your repayment income for a given year falls below $54,435, no compulsory repayment applies for that year. Your debt balance just sits there (subject to annual indexation) until your income exceeds the threshold again.

Does my HECS debt affect my ability to get a home loan?
Yes, lenders take HELP debt into account when assessing borrowing capacity. The compulsory repayment reduces your net income, which reduces how much you can borrow. Some lenders also count the total HELP balance as a liability. Use our Borrowing Power Calculator to see the impact.

Can I defer my HECS repayments?
There's no mechanism to defer compulsory repayments if you earn above the threshold. If you're experiencing financial hardship, you can apply to the ATO for a payment arrangement, but this is rarely granted for HELP debts given they're already structured to be affordable as a percentage of income.

What if I work overseas?
From 2017, Australians with HELP debt working overseas must make repayments based on their worldwide income if it exceeds the threshold — previously, overseas residents could avoid repayments indefinitely.