Tax Planning
Tax Planning Strategies Ahead of Australia’s New Personal Income Tax Cuts
With tax rates dropping in 2026–27 and again in 2027–28, savvy taxpayers can plan ahead to maximise deductions and timing of income—especially self-employed and freelancers.
By NomadicTax Research Team • 5-8 min read • April 13, 2026
## Understanding the Upcoming Tax Cuts
Australia’s government has legislated new personal income tax rates beginning **1 July 2026**, under the *Treasury Laws Amendment (More Cost of Living Relief) Act 2025*.([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai)) Key changes include lowering the lowest marginal rate – dropping the current 16% to **15% in 2026–27**, and further to **14% in 2027–28** for those earning above the tax-free threshold.([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)) For middle and higher earners, the 30%, 37%, and 45% brackets remain, but the base where the 15-14% applies is expanded.([ato.gov.au](https://www.ato.gov.au/law/view/pdf/acts/20250028.pdf?utm_source=openai))
## Strategies to Take Advantage
To make the most of these cuts:
- **Defer income current-year to after 1 July 2026** if possible (while staying compliant). For instance, delay invoicing or payment received for services until the new rate applies.
- **Prepay deductible expenses** before 30 June 2026 (for self-employed or business owners). Items like tools, subscriptions, software, or insurances.
- **Timely asset purchases** – take advantage of instant asset write-off or depreciation schedules before the law changes to claim deductions sooner.
- **Superannuation contributions** could be planned: making concessional contributions now may reduce taxable income at a higher rate.
## Who Benefits Most
- **Low-to-middle income earners** gain immediate relief. Even modest earners, receiving the 15%-rate earlier, benefit more.
- **Freelancers / contractors** can time invoices and payments optimally.
- **Small business owners** getting salary draws or distributions may plan for shifts.
## Examples
- Alice earns $50,000/year as a freelancer. Under the new rates (as of 1 July 2026), the first $45,000 will be taxed at **15%** rather than 16%, translating into several hundred dollars saved.
- Bob runs a small graphic design business. He purchases new computer equipment in June 2026. He claims the deduction under current rules, avoiding higher taxes that might apply for other income later.
## Risks & Considerations
- Avoid “income shifting” that breaches ATO rules around timing or arm’s length transactions.
- Changes only apply to resident taxpayers. Non-residents have different treatment.
- Ensure deductions are **real, substantiated**, and consistent with business purpose.
## Action Plan Now
- Estimate your taxable income for 2025–26 and 2026–27. See how much cuts reduce your liability.
- Talk to your tax adviser about bringing forward deductible expenses or deferring income.
- Monitor for guidance from ATO about transitional rules or edge cases.