Reference
Tax cuts from 1 July 2026: your exact saving
The rate on income between $18,201 and $45,000 fell from 16% to 15%. Here is precisely what that is worth at your income.
Short answer
From 1 July 2026, Australia's income tax rate on earnings between $18,201 and $45,000 fell from 16% to 15%, saving up to $268 a year. Anyone earning $45,000 or more saves the full $268 in 2026-27; below that, the saving is 1% of income above $18,200. A further legislated cut takes the rate to 14% from 1 July 2027.
Your saving, by income
| Taxable income | Tax 2025-26 | Tax 2026-27 | Saving per year | Per week |
|---|---|---|---|---|
| $20,000 | $0 | $0 | $0 | $0 |
| $25,000 | $388 | $320 | $68 | $1 |
| $30,000 | $1,188 | $1,070 | $118 | $2 |
| $35,000 | $1,988 | $1,820 | $168 | $3 |
| $40,000 | $2,913 | $2,695 | $218 | $4 |
| $45,000 | $3,963 | $3,695 | $268 | $5 |
| $50,000 | $5,538 | $5,270 | $268 | $5 |
| $60,000 | $8,688 | $8,420 | $268 | $5 |
| $70,000 | $11,788 | $11,520 | $268 | $5 |
| $80,000 | $14,788 | $14,520 | $268 | $5 |
| $90,000 | $17,788 | $17,520 | $268 | $5 |
| $100,000 | $20,788 | $20,520 | $268 | $5 |
| $120,000 | $26,788 | $26,520 | $268 | $5 |
| $150,000 | $36,838 | $36,570 | $268 | $5 |
| $200,000 | $56,138 | $55,870 | $268 | $5 |
How the cut works
Only one Australian income tax rate changed for 2026-27: the second bracket ($18,201 to $45,000) fell from 16% to 15% under the legislated personal income tax cuts. Because every resident's income passes through that bracket, everyone earning above $18,200 benefits, and the saving caps out once income reaches $45,000 — 1% of the $26,800 bracket width. Rates above $45,000 are unchanged for 2026-27, and the Medicare levy is unaffected.
The same legislation cuts this rate again to 14% from 1 July 2027, which will be worth up to a further $268 a year on top.
The other 1 July 2026 change: the $1,000 instant deduction
The same reform package legislated a $1,000 standard deduction for work-related expenses, applying for the first time to your 2026-27 tax return. If your work expenses are under $1,000 you claim the flat $1,000 with no receipts; if they are higher you keep itemising as before. Union and professional fees, income-protection insurance and donations stay claimable on top. At a 30% marginal rate plus the 2% Medicare levy, the standard deduction is worth up to $320 a year to someone who previously claimed nothing — on top of the rate-cut saving in the table above.
You cannot double-dip by salary packaging expenses the standard deduction covers, and it applies from the 2026-27 return you lodge from July 2027 — not to 2025-26.
Why your payslip may not show it exactly
Employer withholding follows the ATO's PAYG schedules, which round per pay period, so the weekly difference on a payslip can be a dollar or two off the exact figure. Any difference reconciles in your 2026-27 tax return. Check your own numbers with the take-home pay calculator or the 2026-27 tax tables.
Frequently asked questions
How much do I save from the 1 July 2026 tax cut?+
1% of your income between $18,201 and $45,000. At $30,000 that is about $118 a year; at $45,000 or above it is the full $268 a year, roughly $5.15 a week.
Is there another tax cut coming?+
Yes. The same legislation cuts the 15% rate to 14% from 1 July 2027, worth up to a further $268 a year. Both cuts are already law, not proposals.
What is the $1,000 instant deduction from 1 July 2026?+
A legislated standard deduction: claim a flat $1,000 for work-related expenses on your 2026-27 return with no receipts, or keep itemising if your expenses exceed $1,000. Worth up to about $320 a year at a 32% marginal rate for someone who previously claimed nothing.
Does the tax cut change the Medicare levy or HELP repayments?+
No. The Medicare levy stays at 2% and HELP/STSL repayment bands are indexed separately. The cut only lowers the income tax component of your withholding.
Sources & methodology
- ATO - Personal income tax: new tax cuts (15% rate from 1 July 2026)
- Income Tax Rates Act 1986 (legislation.gov.au)
- ATO - Study and training loan repayment thresholds and rates
- ATO - Super guarantee
- ATO - Contribution caps
- ATO - Payday Super and the annual maximum contribution base
- ATO - Medicare levy
- ATO - Medicare levy surcharge income thresholds and rates
- Fair Work Ombudsman - Pay slips
- How we calculate these estimates
Last updated 27 August 2026. Figures use the 2026-27 financial year.