The In-Work Tax Credit (IWTC) is an additional Working for Families payment for families where parents are in paid employment meeting minimum hours requirements. It is designed to provide a financial incentive to work rather than receive a benefit.
The IWTC pays up to $72.50/week ($3,770/year) for families with 1–3 children who meet the minimum hours test: 20+ hours/week for sole parents, 30+ hours/week combined for couples. Families receiving a main benefit are not eligible. IWTC abates along with the Family Tax Credit from $42,700 family income at 27 cents per dollar.
2025–26 IWTC Rates
| Children | Weekly IWTC | Annual IWTC |
|---|---|---|
| 1–3 children | $72.50 | $3,770 |
| 4+ children | $72.50 + $15/child above 3 | Higher |
Eligibility and Minimum Hours
To receive the IWTC:
| Family type | Minimum hours |
|---|---|
| Sole parent | 20+ hours per week |
| Couple with children | Combined 30+ hours/week |
Both partners must work some hours for a couple to qualify — one partner working 30+ hours while the other works zero does not qualify.
Employment types that count toward hours:
- Paid employment (including part-time)
- Self-employment (sole trader, contractor)
- Parental leave (counts as working hours while on leave)
Not eligible:
- Families receiving Jobseeker Support, Sole Parent Support, or other main benefits
- Families where work hours requirements are not met
IWTC and Abatement
IWTC abates together with the Family Tax Credit:
- Starts abating at $42,700 family income
- 27 cents per dollar reduction above the threshold
- The abatement applies to the combined FTC + IWTC entitlement
Sole Parents and IWTC
Sole parents need only 20 hours per week of paid work to qualify — recognising that a sole parent has full childcare responsibilities. Sole parents often find the IWTC makes a meaningful difference, particularly at lower income levels where the abatement has not significantly reduced the entitlement.
IWTC During Parental Leave
Parents on paid parental leave from Work and Income or from their employer (paid parental leave) are considered to be working for IWTC purposes during the parental leave period. You do not lose IWTC eligibility because you are on parental leave.