What’s Changing on 1 July 2026?
Under the legislated Stage 3+ tax cut package, from 1 July 2026 the personal income tax rate for taxable income between $18,201 and $45,000 will drop from 16% to 15%. A further reduction to 14% is set for 1 July 2027. (austax.tools)
Other unchanged elements include the 12% Superannuation Guarantee, 50% capital gains discount, 25/30% company tax rates, GST at 10%, etc. (austax.tools)
Practical Tax Planning Strategies
- Re-evaluate PAYG withholding rates so less is withheld during the year if your income spans this bracket—it may free up cash flow.
- Accelerate deductible expenses or income timing: if you're planning “big” deductible outgoings (self-education, repairs, investment fees), moving them to the 2026-27 year could yield more benefit due to higher marginal tax savings.
- Super contributions: making concessional contributions before 30 June 2026 if you're near the concessional cap may give better value under the current rate vs future circumstances.
Example Comparative Impact
| Income | Tax payable before 1 July 2026 | After 1 July 2026 | Savings |
|---|---|---|---|
| $30,000 | approx. $1,792 | approx. $1,724 | $68 annually |
| $45,000+ | approx. $4,788 | approx. $4,520 | $268 annually |
These savings apply for anyone whose income covers part or most of the second bracket. For incomes well above $135,000, the benefit is limited to the full width of the $18,201–$45,000 range. (austax.tools)
Key Considerations
- The changes are already legislated and mandatory, not proposals. No action from the government needed—your withholding and payroll must reflect the change.
- Be cautious: other related thresholds (LITO, Medicare Levy, HELP repayment, etc.) are waiting on Budget announcements and indexation. Watch for updates. (austax.tools)
- Monitor your marginal tax rate, especially if income edges into higher bands, to ensure you’re not surprised by the cumulative effect of deductions and levies.
Action List Before 30 June 2026
- Review your projected income for 2026-27 to estimate where you’ll sit in the lower brackets.
- Adjust withholding in payroll so you don’t underpay taxes or face a large bill at tax time.
- Review investment and super strategies with these new rates in mind.
- Track announcements post-Budget 13 May 2026 for updated threshold numbers and offset changes.
Why This Tax Planning Matters
Even modest rate reductions can yield meaningful savings, especially for low and middle income earners. With lower tax on $18,200-$45,000 income, more disposable income—if managed responsibly—can compound via investment, debt repayment, or family care. These are once-legislated changes, so there’s certainty for planning ahead.
Leveraging these adjustments smartly ahead of time puts individuals and small business owners in stronger financial positions heading into the 2026-27 financial year.