Tax Planning
How the 2026–27 Personal Income Tax Cuts Impact Everyday Australians
With the new tax cuts beginning 1 July 2026, many taxpayers will see changes to their marginal rates—here’s what you need to know and how to plan ahead.
By NomadicTax Research Team • 6 min read • April 19, 2026
## What’s Changing
- From **1 July 2026**, the current 16% tax rate on ordinary income portions just above the tax-free threshold (up to $45,000) will be reduced to **15%**. ([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))
- Then, from **1 July 2027**, that rate drops further to **14%**. ([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))
- These cuts are part of the Treasury Laws Amendment (More Cost of Living Relief) Act 2025 and are now law. ([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai))
## Who Benefits
- **Low- to middle-income earners**: anyone with ordinary taxable income above the tax-free threshold up to $45,000 will immediately benefit from the lowest marginal rate falling to 15% from mid-2026.
- **High-income earners**: their top marginal rates (37% and 45% on income above $135,000 and $190,000 respectively) remain unchanged under these cuts. ([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))
## Planning Tips & Examples
- If you **earn $50,000/year**, you’ll save tax on the portion between your threshold and $45,000—from 16% down to 15%—and further down to 14% in 2027. Over a full year this may mean several hundred dollars saved. Use a tax estimator to see your specific benefit.
- For those earning $200,000+, even though the top rates stay the same, the first slice of income saves you money, and careful planning around deductions & non-salary income might still yield gains.
- Employers and payroll departments should be ready to update tax tables, payroll software, withholding schedules for the 2026-27 year. This includes PAYG withholding and any fringe-benefit or other applicable tax tables.
## Actionable Steps
1. **Run your numbers**: estimate your current year vs. 2026-27 tax liability and cash flow, factoring in new resident tax cuts.
2. **Update withholding**: if you expect your income to stay stable or rise, consider adjusting PAYG withholding early so you avoid owing a large amount at tax time.
3. **Review deductions**: if you plan investments or major purchases (e.g. for work), timing deductions or expenses just before the July 2026 rate cut can yield higher benefit.
4. **Seek advice early**: for complex affairs (trusts, businesses, foreign income), discuss with tax advisors in advance of the new rates to optimise structure.
## Bottom Line
These tax cuts are designed to reduce bracket creep and deliver cost-of-living relief. For many taxpayers, the difference in rates may seem modest (1% to 2%), but over time and across different income levels, it adds up. Planning ahead means you’ll get the full benefit from July 2026 and beyond.