One of the headline changes Australians will see in 2026 is a cut to personal income tax. From 1 July 2026, the lowest marginal tax rate — currently 16 per cent — will fall to 15 per cent for taxpayers earning above the tax‑free threshold.
How Much Could You Save?
Government projections suggest this tax cut could mean:
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Around $268 in extra take‑home pay for many workers in 2026,
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Growing to as much as $536 from 2027 as further tax bracket adjustments take effect.
While the benefit isn’t huge for most, it does put a bit more money in workers’ pockets and can help with everyday expenses or savings goals.
Who Benefits Most?
The cut benefits middle and lower‑income earners the most, because reducing the base rate affects a larger slice of ordinary income. High‑income taxpayers still pay the upper marginal rates on income above those brackets.
Things to Keep in Mind
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This change is built into law, not an automatic annual indexation;
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You won’t need to take action — it will be reflected in the tax withheld from your pay from 1 July.
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If you do your own tax withholdings through payroll software or MYOB/Xero, update your settings after 30 June 2026.
