Tax Planning
Making the Most of the 2026-27 Tax Cuts: Tax Planning Moves for Individuals
Australia’s upcoming income tax rate changes open opportunities if you plan wisely—here’s how to adjust deductions, salary packaging, or investment timing to align with the new brackets.
By NomadicTax Research Team • 5-8 min read • March 5, 2026
## Overview of the New Tax Rates for 2026-27
The **Treasury Laws Amendment (More Cost of Living Relief) Act 2025** introduces updated tax rates from **1 July 2026**:
| Taxable Income Bracket | New Tax Rate (Resident Taxpayers) |
|-------------------------|-------------------------------|
| Over tax-free threshold to $45,000 | **15%** ([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai)) |
| $45,000–$135,000 | 30% ([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai)) |
| $135,000–$190,000 | 37% ([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai)) |
| Above $190,000 | 45% ([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai)) |
There will be further relief in the following year, 2027-28, when the lowest non-taxable rate bracket is reduced to **14%**. ([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai))
## Tax Planning Strategies You Can Use
- **Pre-pay deductible expenses (if applicable)**: If you expect to fall in the 30% or 37% bracket for part of 2026-27, prepaying professional fees, subscriptions or investment-related costs before 1 July 2026 can bring those into 2025-26 when you might be in a higher rate.
- **Accelerate capital gains or losses**: Realise planned capital gains before 30 June 2026 if you have losses or lower income that year; or postpone gains until after the July changes if you're currently near a bracket threshold.
- **Review salary packaging and super contributions**: Increasing concessional super contributions before the new rate comes into effect might reduce taxable income in 2026-27. If your employer offers salary sacrifice, align it properly.
- **Small income siblings or side incomes**: Income-splitting tools or trust distributions may gain benefit as lower marginal bands are more generous. A distribution of trust income to beneficiaries in lower brackets will have more impact with these lower rates.
## Example Scenarios
- **Mid-career professional** earning $150,000: Under the 2025-26 rates, a portion above $135,000 is taxed at 39% but from 1 July 2026 that drops to 37%. That’s an immediate effective saving on marginal income over $135,000. Adjusting deductions or timing bonuses for the right financial year can greatly affect total tax paid.
- **Part-time freelancer** bringing in an additional $20,000 outside your salary: If your total income pushes you into the 30% or 37% rates, consider whether you can bring forward expenses into the prior year, or delay invoicing to after 30 June to better smooth rates.
## Caveats and Things to Watch Out For
- These rates apply to **resident taxpayers**. Foreign resident rates and treaty-based income may follow different rules.
- The **tax-free threshold** remains; only the rate for amounts above it changes.
- Be mindful of **other thresholds** (Medicare levy, super contributions, fringe benefits) that may have requirements not aligned with income brackets.
## Action Plan Before 30 June 2026
- Estimate your total taxable income for 2025-26 and 2026-27 to identify bracket shifts.
- Consult your accountant for appropriate timing of deductions or income recognition.
- Ensure record keeping is in place for any prepayments or one-off costs.
Understanding these upcoming tax cuts and aligning your financial decisions accordingly can lead to real savings when the rates shift. If you’d like personalized calculations, your tax adviser can help model your best path.