From 1 July 2026, personal income tax rates will change.
On the last sitting day of Parliament, the personal income tax rate reduction announced in the 2025-26 Federal Budget was confirmed.
The modest reduction of 1% applies to the $18,201-$45,000 tax bracket, reducing from its current rate of 16% to 15% from 1 July 2026, then to 14% from 2027-28.
The savings from the tax cut represent a maximum of $268 in the 2026-27 year and $536 from the 2027-28 year.
Personal Tax Rates to June 2028
|
Pre-tax earnings |
Rates in 2024-25 & 2025-26
% |
Rates in 2026-27
% |
Rates in 2027-28
% |
| 0 – 18,200 | Tax Free | Tax Free | Tax Free |
| 18,201 – 45,000 | 16 | 15 | 14 |
| 45,001 – 135,000 | 30 | 30 | 30 |
| 135,001 – 190,000 | 37 | 37 | 37 |
| > 190,000 | 45 | 45 | 45 |
Source: Treasury 2025-26
With a 1 July 2026 start date, the outcome of the Federal election on 3 May 2025 and subsequent budgets will determine whether this change comes to fruition.
Medicare levy threshold change for low-income earners
Low-income earners do not pay the compulsory 2% Medicare levy until their assessable income reaches the threshold. The threshold is different depending on whether you are a single taxpayer or pensioner and the number of children you have who are dependent on you.
Parliament has confirmed the increase to the Medicare levy threshold announced in the Federal Budget. The threshold change is backdated to 1 July 2024, meaning taxpayers will benefit when they lodge their 2024-25 tax return.
See our Budget 2025-26 summary for details.
But what about …?
If you have any tax or medicare levy concerns or questions, please do not hesitate to contact us. We are always here to help.
