Compliance
How PAYG Withholding Updates Will Change Payroll from July 2026
Major changes to Pay As You Go (PAYG) withholding tax tables and schedules are coming into force on 1 July 2026—what employers and payroll professionals need to know now.
By NomadicTax Research Team • 5-8 min read • May 25, 2026
## What’s Changing
Australia’s ATO has released updated **2026 PAYG withholding tax tables** that will apply from 1 July 2026. These affect all 15 withholding schedules and 12 tax tables, including ***Schedule 1 (NAT 1004)*** and ***Schedule 8 (Study and Training Support Loans, NAT 3539)***. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai)) Changes reflect the tax cuts passed under the **Treasury Laws Amendment (More Cost of Living Relief) Act 2025**, as well as the indexation of thresholds and other caps for superannuation, lump sums, and study loan repayments. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai))
## Who Needs to Act—and How
| Role | Key Actions Required | Deadline / Effective Date |
|------|----------------------|----------------------------|
| Employers & payroll teams | Review payroll software/plugins to ensure updated tables are used; implement for pay-periods from 1 July. | Software must be ready by 1 July 2026. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai)) |
| Individuals with loans (e.g. HELP, FTS) | Understand new repayment thresholds and quarterly estimation changes; assess whether withholding or instalments should be adjusted. | Changes also apply from 1 July 2026. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai)) |
| Tax agents & DSPs (Digital Service Providers) | Test systems, ensure correct schedules output, especially those dealing with superannuation lumps, income streams. | Prior to Tax Time 2027. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai)) |
## Practical Examples
- **John**, employee earning **AUD 90,000**: under new tables, tax withheld towards study loan repayment will be lower because repayment income threshold has increased, resulting in slightly higher take-home pay. ([ato.gov.au](https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/study-and-training-loans-what-s-new?utm_source=openai))
- **TechCorp**, mid-size company: needs to ensure its payroll system can handle not only standard withholdings but also super guarantee caps and general termination payments, especially noting updated caps in schedules 11-13. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai))
## Why This Matters Now
- **Bracket creep relief**: These table changes are one of the key mechanisms through which the government returns bracket creep relief under its 2025-26 Budget. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/personal-income-tax-new-tax-cuts-for-every-australian-taxpayer?utm_source=openai))
- **Compliance risk**: Using outdated rates/schedules will result in under- or over-withholding, which can lead to penalties and unexpected liabilities for employers and employees.
## Action Plan Checklist
1. Audit current payroll system functionality.
2. Download updated NAT forms and schedules from the ATO site early (available around mid-June for some NAT attachments) ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai)).
3. Run mock payrolls for July onwards to test with new tables.
4. Communicate changes to employees likely to be significantly impacted (e.g. those near threshold brackets, or with study loans).
5. Document versions used for audit/compliance purposes in case of later ATO review.
**Bottom line:** the 2026 PAYG withholding updates represent real tax-rate cuts for individuals, tighter thresholds, and multiple caps changing. Employers and payroll processors must stay ahead to avoid penalties and ensure accurate withholding.