Australian taxpayers will see new tax cuts take place as of 1 July 2026. The new tax cuts in Australia are designed to help you keep more of what you earn. To maximise your benefits, it is vital to understand these new tax cuts.
We know taxes can be confusing, especially when new changes are implemented. Here is an easy breakdown of the new tax changes and how they will affect you.
Overview of the new Tax Cuts
Key Changes Effective from 1 July 2026
Here are the main changes to know for the new tax cuts in Australia:
- 2026 will bring the first new tax cut. From 1 July 2026, the tax rate for individuals earning between $18,201 and $45,000 will be reduced from 16% to 15%.
- 2027 will bring the second new tax cut. As of 1 July 2027, the tax rate for the $18,201 to $45,000 bracket will be reduced further to 14%.
- The Australian Government will also increase the Medicare levy low‑income thresholds from 2024–25.
These changes are part of the government’s efforts to provide cost-of-living relief and address bracket creep. Learn more about the new tax cuts here on the ATO’s site: Personal income tax – new tax cuts for every Australian taxpayer.
Impact on Different Income Brackets
Low-Income Earners
The new tax cuts can benefit those earning between $18,201 and $45,000. Australians in this tax bracket will see a reduced tax rate in both 2026/2027 and 2027/2028.
Under the new tax cuts, the lower tax bracket will be at its lowest rate in over 5 decades. Additionally, low-income earners will pay a reduced levy rate or be exempt from the Medicare levy. More than a million Australians will benefit from this change.
Middle and High-Income Earners
The $45,001 – 120,000 tax bracket experienced a significant tax cut in 2024. The tax rate dropped from 32.5 to 30 percent. This middle-income tax bracket will remain at 30 percent for the foreseeable future.
Those earning between $120,001 – $135,000 also saw a huge tax cut in 2024, dropping from 37% to 30%, with the extension of the middle income tax bracket from $120,000 to $135,000. This will remain at 30% through at least 2027/2028.
Middle and high income earners will enjoy a reduced tax rate on the first $45,000 of income. On this portion of income, they will pay a reduced rate of 15% as of 1 July 2026. They will owe 14% on this portion of income as of 1 July 2027.
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Combined Effect with Previous Tax Cuts
Cumulative Savings
The good news for Australian taxpayers is that the new tax cuts will add further savings to the tax relief that has already been implemented.
Combined with the 2024-2025 tax cuts, the 2025-2026 tax cuts will provide further relief for millions of Australians.
Here is a look at the cumulative savings on top of the new tax cuts that have already occurred:
- Every Australian taxpayer earning between $18,201 to $45,000 will qualify for an extra tax cut in 2026-2027. This means about 80 percent of Australian taxpayers will get an extra tax cut of $268 compared to 2024/2025.
- Average earners can expect to get an extra $268 tax cut in 20262027 and $536 annually from 2027/2028 forward
Preparing for the New Tax Changes
Consulting with Tax Professionals
Seeking professional advice can help you maximise the benefits of the new tax cuts.
Our tax professionals know exactly how to get you the highest refund you are entitled to. We guarantee stress-free, accurate, maximised returns done fast!
We’ve been helping Australians understand tax changes and lodge easy, fast returns for years. If you’re looking for help with the new tax cuts, we are here to make it easy for you.
Maximise Your Benefits from the New Tax Cuts
The new tax cuts intend to increase labour supply, reduce bracket creep, and boost financial rewards for millions of Australians.
If you want to make sure you understand these new tax cuts and maximise your benefits, our licensed tax professionals can make it easy for you.
Ready to navigate the upcoming tax changes? Contact TaxReturn.com.au today for expert advice and ensure you’re making the most of your income.
*General Advice Warning – “Any financial advice provided by TaxReturn.com.au is general in nature and is not personal financial advice. It does not take into account your objectives, financial situation, or needs. Before acting on any information, you should consider the appropriateness of it regarding your own objectives, financial situation and needs.”
FAQs About the New Tax Cuts
What are the new tax rates effective from 1 July 2026?
The tax rate for income between $18,201 and $45,000 will be reduced to 15% from the current tax rate of 16%. These new tax cuts take effect as of 1 July 2026. As of July 1, 2027, the rate will be further reduced to 14%.
How do these changes affect my take-home pay?
With the new tax cuts in Australia, individuals in the $18,201 to 45,000 tax bracket will see increased tax home pay. Compared to 2023/2024, millions of Australians will keep more of what they earn.
Will there be further tax changes after 2027?
The $18,201 to $45,000 tax bracket will reduce from 16% to 15% as of 1 July 2026. In 2027, this rate will be further reduced to 14%. No broader tax changes have been announced at this time.
How can I ensure I’m maximising my tax benefits?
We strongly recommend working with a licensed tax professional to lodge a 100% accurate tax return with maximum tax benefits. Our tax professionals have helped hundreds of Australians ensure they are making the most of their tax refund. In just a few seconds, you can register with one of our licensed tax agents. From there, we handle all the hard work and make sure we find you every tax cut you are entitled to.
