Tax Planning
Maximising Your Refund: Smart Tax Planning for Individuals Before the 2026-27 Income Year
With major tax cuts and changing thresholds on the horizon from mid-2026, early planning can help Australians reduce tax liability and optimise deductions—this article explains strategies to act now.
By NomadicTax Research Team • 5-8 min read • April 20, 2026
## Understanding the Tax Cuts Coming 1 July 2026 and 2027
The **Treasury Laws Amendment (More Cost of Living Relief) Act 2025** introduces personal income tax rate reductions:
- From **1 July 2026**, the tax rate for residents with ordinary taxable income between **$18,201–$45,000** will drop from **16% 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))
- From **1 July 2027**, the same bracket rate decreases 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 changes are **already law**, meaning your tax-planning for the 2025-26 year should anticipate the benefits. ([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))
## Key Strategies to Consider Now
### 1. Shift Income Where Possible to This Low Rate Bracket
If you can defer income until after 1 July 2026, your income between $18,201 and $45,000 will be taxed at **lower rates**. Be mindful of cashflow impacts.
### 2. Prepay Deductible Expenses Before 30 June 2026
Lock in deductions for work-related expenses, interest, or other deductible costs by prepaying where legally permissible. This maximises the lower rate year benefits and reduces input for the 2026-27 return.
### 3. Make Super Contributions Strategically
Voluntary (or salary sacrifice) contributions can push taxable income into different brackets or accumulate non-taxable elements (like the tax-free component in super). However, ensure contributions don’t breach caps, and anticipate the timing of SG obligation reforms. See the section on *Payday Super* reforms. ([ato.gov.au](https://www.ato.gov.au/law/view/document?LocID=%22COD%2FLCR2026D3%2FNAT%2FATO%2Fft7%22&PiT=99991231235958&utm_source=openai))
### 4. Review Withholding and the Repayment of Study-Loans
Changes to Study and Training Support Loans (STSL) repayment thresholds and income tax withholding tables take effect 24 September 2025. If you expect obligations, adjust your withholding or voluntary repayments to avoid surprises. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-73b93a06-6da3-4452-8161-64681f65da13?utm_source=openai))
## Examples
- **Student Loan Example**: Grace earns $67,000 in 2025-26. Under new law, repayments begin only above that threshold; so her employer withholds less, giving extra take-home pay. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-736963d7-4616-49dd-bfbe-9dab124707a2?utm_source=openai))
- **Freelancer Example**: Jane expects to earn $40,000 in 2026-27. If she incurs deductible expenses before July 2026, they reduce her taxable income during 2025-26 when she still faces the older rate, benefiting from timing.
## Risks & Things to Avoid
- Going past the income thresholds unwittingly due to bonuses, allowances etc., and losing lower rate benefit.
- Prepaying expenses without contractual or business basis may be disallowed.
- Ignoring transitional SG rules or overlapping obligations may cause mismatches or penalties.
## Action Plan Checklist
- Calculate projected income for 2025-26 vs 2026-27
- Identify expenses you can legitimately bring forward or defer
- Consult with accountant on super contribution timing and SG reforms
- Check updated tax tables (STSL, withholding) and adjust payroll or PAYG instalments accordingly
- Keep detailed records of all decisions for ATO scrutiny
By planning ahead now, individuals can make full use of the tax rate cuts arriving mid-2026, optimise deductions, and minimise surprises during next tax time.