Questions about who pays the most tax in Australia have returned to the spotlight after new research suggested the nation’s tax and transfer system places its greatest financial burden on middle-aged workers while providing comparatively larger benefits to many older Australians.

The findings have renewed debate about intergenerational fairness, with economists, policymakers and industry groups discussing whether Australia’s tax settings continue to reflect changing demographics, housing costs and patterns of wealth accumulation.

The analysis, prepared by the Actuaries Institute, examined how Australians of different ages contribute to and benefit from the country’s tax and welfare system. According to the report, people in their early-to-mid 40s face the highest net tax burden, with individuals around the age of 43 paying more tax on average than any other age group after government transfers are taken into account.

The report argues that Australians with identical gross incomes can experience very different financial outcomes depending on their stage of life. Researchers found that many retirees benefit from age-related tax concessions, superannuation settings and government support, while working-age Australians generally rely more heavily on employment income that is subject to personal income tax. The analysis estimated that, in some circumstances, two people earning similar gross incomes could experience a gap of tens of thousands of dollars in net annual income because of differences in taxes and government benefits.

Researchers also highlighted the position of younger Australians. The report found that people in their twenties and early thirties are the only age group whose inflation-adjusted disposable incomes have shown little improvement over the past two decades. Rising housing costs, slower wealth accumulation and higher living expenses were identified as important factors affecting younger households alongside the structure of the tax and transfer system.

The authors argue that Australia’s tax system has gradually become more dependent on income earned through work, while several forms of accumulated wealth continue to receive concessional treatment. They suggest policymakers consider reviewing some age-based tax concessions and improving means testing for certain benefits to better balance support between generations. One proposal discussed separately by the Policy Institute Australia is a HECS-style retirement contribution model linked to housing equity, although this is not government policy.

Not everyone agrees on the appropriate response. Supporters of the current arrangements argue that many tax concessions recognise the fact that older Australians have contributed taxes throughout their working lives and often rely on retirement savings accumulated over decades. Others caution that any significant changes to retirement taxation or superannuation settings could affect financial planning and confidence among retirees.

Economists note that measuring fairness within a tax system is inherently complex. Lifetime tax contributions, government services such as health and education, pensions, family assistance and infrastructure spending all influence the overall balance between generations. As a result, different analytical methods can produce different conclusions about which groups receive the greatest net benefit over their lifetimes.

The findings arrive as Australia continues debating broader tax reform, housing affordability and the long-term sustainability of government finances. With an ageing population and increasing pressure on public spending, policymakers from across the political spectrum have acknowledged that questions about intergenerational equity are likely to remain central to future economic discussions.

Whether future governments pursue major tax reform remains uncertain. However, the latest analysis has added fresh evidence to an ongoing conversation about how Australia’s tax system distributes responsibilities and benefits across different generations, and whether those settings remain appropriate for the country’s changing economic and demographic landscape.