Personal Income Tax Cuts From 1 July 2026: 16% to 15%
Last reviewed:
Primary tax-year context: Current Australian tax settings
This article is general information only. We maintain pages using primary-source checks and date-based reviews. See editorial policy.
General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.
ATO guidance confirms the next round of personal tax cuts from the 2025-26 Budget has been legislated:
- From 1 July 2026, the $18,201 to $45,000 bracket drops from 16% to 15%.
- From 1 July 2027, that same bracket is scheduled to reduce further to 14%.
This means most taxpayers with taxable income should see a modest improvement in take-home pay from the 2026-27 financial year.
Which income range is affected
This change only applies to the $18,201-$45,000 marginal bracket.
- It is not a 1% cut on your entire income.
- Only the portion inside that bracket is taxed at the lower rate.
Higher-income taxpayers can still benefit, but the maximum benefit is capped by the size of that bracket.
Approximate impact (before individual adjustments)
Using the rate change alone:
- Affected bracket width: $26,800
- Rate reduction: 1%
- Approximate annual maximum reduction: $268 (before other factors)
Your final result will still depend on Medicare levy, deductions, withholding settings, and other personal factors.
Practical next steps
- Check PAYG withholding on your first payslip after July 2026.
- Recalculate annual take-home pay to avoid refund or tax-bill surprises.
- If you have multiple income sources, review whether your withholding setup should be updated.
Bottom line
This is not a large tax cut, but it is a confirmed legislated change that can improve cash flow. For budget-sensitive households, updating cash-flow plans early is the practical move.