Offset Account Calculator Australia โ FY 2025-26
Calculate how your offset account saves interest, compare offset vs savings account after tax, and see how building your offset balance pays off your home loan faster. Offset savings are tax-free.
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How to Use This Calculator
Offset Savings tab
Enter your loan balance, interest rate, offset balance, and loan term remaining. The calculator shows your monthly interest with and without the offset, your monthly saving, total interest saved over the loan life, and how many years the offset takes off your loan.
Offset vs Savings tab
Enter the amount you want to park, your mortgage rate, the best savings account rate available, and your marginal tax rate. See the tax-free offset benefit compared to the after-tax savings return, and the effective pre-tax return of your offset.
Offset Strategy tab
Enter your loan balance, current offset balance, and monthly amount you can add to the offset. See how building your offset balance over time reduces your loan term and total interest paid.
Share your result
All inputs are encoded in the URL. Click Share to send your exact calculation to your broker, partner, or financial adviser.
The Formula
Interest = Loan Balance × Annual Rate / 12
Monthly Interest With Offset:
Interest = (Loan Balance − Offset Balance) × Annual Rate / 12
Monthly Saving:
Saving = Offset Balance × Annual Rate / 12
Tax-Free Equivalent Return:
Pre-tax Equivalent = Mortgage Rate / (1 − Marginal Tax Rate)
Example: At 6.5% mortgage rate and 37% marginal tax rate:
Pre-tax equivalent = 6.5% / (1 − 0.37) = 10.3%
You would need a savings account paying 10.3% before tax to match offset.
Worked Example
$500K Loan at 6.5%, $80K in Offset
A typical Australian homeowner with a variable-rate mortgage and a well-funded offset account.
Step 1: Monthly interest comparison
Step 2: Savings
Step 3: Tax-free equivalent
Verdict: The $80K in offset saves $5,200/year in tax-free interest. To match this with a savings account at 37% tax, you would need a rate of 10.3% — more than double the best savings rates available. The offset account wins decisively for most taxpayers.
Offset Account Key Data (March 2026)
Offset vs savings comparison at each tax bracket
| Tax Bracket | Marginal Rate | 6.5% Offset Equiv. | 4.5% Savings After Tax |
|---|---|---|---|
| $0 – $18,200 | 0% | 6.5% | 4.5% |
| $18,201 – $45,000 | 16% | 7.7% | 3.8% |
| $45,001 – $135,000 | 30% | 9.3% | 3.2% |
| $135,001 – $190,000 | 37% | 10.3% | 2.8% |
| $190,001+ | 45% | 11.8% | 2.5% |
Stage 3 tax brackets FY 2025-26. Offset equivalent = mortgage rate / (1 − marginal rate). Source: ATO (ato.gov.au).
Typical offset account features
| Feature | Detail |
|---|---|
| Type | 100% offset (most common) |
| Annual fee | $0 – $395 (package fee) |
| Access | Full transaction account (card, BPAY, transfers) |
| Tax treatment | Tax-free (interest saved, not earned) |
| Works with | Variable rate loans (some fixed packages include offset) |
Source: Comparison of major bank offset account features, March 2026.
Current high-yield savings rates
| Type | Rate | Note |
|---|---|---|
| Best high-yield savings | ~5.0% | Conditional (deposit/spend requirements) |
| Average high-yield | ~4.5% | With bonus conditions met |
| Base rate (no conditions) | ~1.0–2.5% | Ongoing rate without conditions |
All savings interest is taxable at your marginal rate. Sources: Finder.com.au, RateCity.com.au.