On 1 July 2026 the tax rate on income between $18,201 and $45,000 fell from 16% to 15%. It is the first of two legislated cuts to the bottom bracket, with a second taking it to 14% from 1 July 2027. Nothing else in the rate scale changed this year, so the cut is small, but it reaches almost every taxpayer.
The 2026–27 resident tax rates
| Taxable income | Tax on this income |
|---|---|
| $0 to $18,200 | Nil |
| $18,201 to $45,000 | 15c for each $1 over $18,200 |
| $45,001 to $135,000 | $4,020 plus 30c for each $1 over $45,000 |
| $135,001 to $190,000 | $31,020 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,370 plus 45c for each $1 over $190,000 |
The 2% Medicare levy comes on top for most residents, unless your income is low enough for a reduction.
How much you save
The one-point cut applies to the $26,800 of income inside the bracket, so the most anyone saves is $268 a year, a little over $5 a week. Everyone earning above $45,000 gets that full amount, whatever their salary. Below $45,000 the saving is smaller, and people under the $18,200 tax-free threshold pay no tax either way.
Take-home pay by salary in 2026–27
For a resident with no study loan, private hospital cover and no salary sacrifice, before any deductions:
| Salary | Tax and Medicare | Take-home | Saving vs 2025–26 |
|---|---|---|---|
| $40,000 | $3,495 | $36,505 | $218 |
| $60,000 | $9,620 | $50,380 | $268 |
| $80,000 | $16,120 | $63,880 | $268 |
| $100,000 | $22,520 | $77,480 | $268 |
| $150,000 | $39,570 | $110,430 | $268 |
| $200,000 | $59,870 | $140,130 | $268 |
Tax figures include the low income tax offset, which is worth up to $700 for incomes up to $37,500 and phases out completely at $66,667. Super is paid on top of these salaries at 12%.
Other changes coming
- $1,000 instant deduction: from 2026–27 you can claim $1,000 of work-related expenses without receipts. The government expects an average saving of $205 for the 6.2 million people who use it.
- 14% from 1 July 2027: the bottom rate falls again, doubling the maximum saving to $536 a year compared with 2024–25.
- $250 Working Australians Tax Offset: announced in the 2026 Budget, a permanent offset for workers from 2027–28.
Second jobs and the tax-free threshold
If you have more than one job, you can usually claim the tax-free threshold from only one employer. The other employer withholds tax from the first dollar, at the new 15% rate up to $45,000. That can leave you paying slightly too much or too little during the year, with the difference sorted out when you lodge your return. If you expect to owe, ask your second employer to withhold a little extra so there is no surprise bill.
Will you notice it?
Employers adjusted PAYG withholding from July, so the saving arrives in each pay rather than at tax time. On a fortnightly pay it is worth about $10. With inflation at 4.3% and mortgage rates rising, it is welcome but modest.
To see your own take-home pay, including super, HECS-HELP and the Medicare levy surcharge, use the pay calculator, which uses the ATO's 2026–27 rates.