Tax Planning
Optimising Tax Cuts from 2026-27: How Every Australian Can Maximise Savings
With new personal income tax cuts kicking in from 1 July 2026 and further rate reductions in 2027, understanding how to structure income and deductions can help you make the most of this relief.
By NomadicTax Research Team • 5-8 min read • March 4, 2026
## What’s Changing with Personal Income Tax From July 2026 and Beyond
- As part of the 2025-26 Federal Budget, the bottom marginal rate of **16% will drop to 15% from 1 July 2026**, then further to **14% from 1 July 2027** for taxable incomes between the tax-free threshold and $45,000. ([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 **restore bracket creep relief**, ensuring that inflation-driven income growth doesn’t push people into higher tax burdens unfairly. ([ministers.treasury.gov.au](https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/new-cost-living-tax-cuts-under-labor?utm_source=openai))
## Tax Planning Strategies to Make the Cuts Count
### 1. Anticipate Income Timing
- If possible, schedule **bonus payments, contract income, or capital gains** so that income falls during a lower-rate year. For example, delaying a major payment until after July 2026 could secure the 15% rate.
- On the flip side, in 2027-28 and beyond, the rate drops further; if there’s flexibility, shifting income to later years might be beneficial.
### 2. Maximise Deductions and Offsets in High-Income Years
- Use years before 1 July 2026 to claim work-related expenses, investment losses, or deductible charitable contributions. That lowers income taxed at higher rates that won’t exist or will be reduced post-cuts.
- If you have a marginal tax rate between 32.5–45%, shifting deductions to those years could yield greater tax break.
### 3. Leverage Non-Salary Income Structures
- For business owners or sole traders, consider how income is split or distributed, whether via trusts or partnerships. This can expose portions of income to the softer 14-15% tiers.
- Ensure trusts use streaming to allocate income to beneficiaries in lower tax brackets.
## Examples
| Scenario | Before Cuts | After Cuts (July 2026) | After Cuts (July 2027) |
|---|---|---|---|
| $40,000 salary | taxed at 16% rate | taxed at **15%** | taxed at **14%** |
| $80,000 salary | portions between tiers 2-4 taxed at 30-45% unchanged in bottom tier | same bottom portion saves 1% | saves 2% |
## Actionable Steps for Individuals
1. Run projections of your income over 2025-26 to 2027-28, factoring in deductions and timing of realisations of investment gains.
2. If approaching the $45,000 threshold, explore prepaying certain expenses or deferring income to stay in lower margins.
3. Talk to your payroll provider if minor income adjustments are possible (e.g. splitting payments across financial years).
4. Ensure investment income and trust distributions flow to lower rate entities or individuals, where available.
**Bottom line:** The upcoming tax cuts are a once-in-decade opportunity to lower your tax load, especially for low-to-middle-income earners. With careful timing and structuring, you can keep more of what you earn.