Tax Planning
How Recent Tax Cuts and Withholding Updates Affect Your Take-Home Pay from July 2026
New personal income tax rate cuts and updated PAYG withholding tables from 1 July 2026 will reshape what you pay, what your employer withholds, and how much you take home.
By NomadicTax Research Team • 5-8 min read • July 9, 2026
## Recent Changes to Income Tax Rates & Withholding
From **1 July 2026**, the **Treasury Laws Amendment (More Cost of Living Relief) Act 2025** will implement new tax cuts, affecting all Australian taxpayers. These include:
- The **16% personal income tax rate** reduced to **15%**.
- From **1 July 2027**, this rate will fall further from **15% to 14%**. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-307bd737-ce3a-4500-8a3d-77b5fd2a774a?utm_source=openai))
- PAYG withholding tax tables updated to reflect these cuts, and **thresholds for study and training support loan repayment updated** too. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
## What Employers and Employees Need to Know
### Employers:
- Update payroll software and tax withholding settings so that rates take effect from first pay period on/after 1 July 2026.
- Check schedules such as NAT 1004, 3539, etc., to ensure correct formulae and thresholds are used. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
### Employees:
- **Take-home pay** should increase slightly due to reduced taxation rate and possible changes in thresholds.
- If you have multiple jobs, second job incomes may still be taxed at higher rates unless tax-free threshold is claimed correctly.
- Higher thresholds for study and training loans may reduce repayments for some.
## Practical Examples
- **Single full-time employee** earning AUD 70,000/year: under old schedule, more tax is withheld monthly; starting July 2026, lower rates reduce tax withheld—and your net pay goes up slightly.
- **Part-time job on second payer**: if you have not claimed your tax-free threshold from your second job, the new tables will still apply—ensure you decide which job to claim threshold from to reduce withholding.
## What to Watch Out For
- Ensure your **tax agent or payroll provider** applies the new rates and tables **from 1 July** and not accidentally carry forward old ones.
- If your income straddles different thresholds or includes study-loan repayments, check the **new thresholds** to see how your repayments might change.
- Review end-of-year income projections, especially if you get bonuses or lump sums near threshold boundaries.
## Summary & Takeaways
These changes represent **medium-impact** relief for many taxpayers. Employees will see modest increases in net pay, employers must make system changes. Acting ahead—updating payroll systems & educating staff—is the best path to seamless implementation.