Tax Planning
Updating Payroll Withholding: New PAYG Tables & Personal Tax Cuts From 1 July 2026
Personal income tax rate cuts and adjusted thresholds are baked into Australia’s PAYG withholding tables effective 1 July 2026—impacting payroll calculations, loan repayments, and take-home pay.
By NomadicTax Research Team • 5-8 min read • June 15, 2026
## What’s New in the PAYG Tables?
Effective **1 July 2026**, Australia’s tax withholding tables for PAYG (Pay As You Go) will be updated to reflect:
- Personal income tax rate cuts announced in the 2025-26 Budget and enacted via the *Treasury Laws Amendment (More Cost of Living Relief) Act 2025*. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai))
- Indexation of **Study and Training Support Loan (STSL)** repayment thresholds. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai))
All **15 withholding schedules** and **12 tax tables** are being updated to align with the new rates and thresholds. These changes become effective at the start of the financial year, 1 July 2026. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai))
## Impacts for Employers & Employees
### For Employers:
- Payroll systems must be updated to use the new withholding tables from **1 July 2026**. Using old tables could result in incorrect withholding and liability risk.
- Additional forms like **Schedule 8** (for STSL components) and **Schedule 1** (formulas for withholding) will reflect the new rules. Make sure you download the current versions. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/2026-pay-you-go-payg-withholding-tax-tables-0?utm_source=openai))
### For Employees / Workers:
- **Take-home pay increases**: due to lower tax rates, the amount withheld will be lower, boosting net wages.
- **Student loan / HELP repayments**: with updated thresholds, some employees may pay less toward these debts—or begin repayments later, depending on income.
- **Planning opportunities**: understanding new thresholds may help in timing income, bonuses or other payments to minimize tax or loan repayment exposure.
## Practical Example
Sarah earns $100,000 per year; under the previous tax table, her monthly withholding was based on older rates. After 1 July 2026:
- Her employer must refer to the updated **monthly tax table** for her pay period.
- Her employer also checks if she has any outstanding HELP or STSL debt, and uses the **new thresholds** to calculate how much must be withheld.
- Result: her take-home pay for July 2026 may be noticeably higher.
## Action Steps to Prepare
- Ensure your payroll software or service provider updates withholding tables before end of June 2026. Test calculations with sample pays.
- Communicate with payroll teams and employees about expected changes in net pay (especially for those near margin thresholds).
- Review employment contracts that specify after-tax pay or net‐of tax promises—to avoid unintended shortfalls or misaligned payments.
The 2026 withholding table updates represent a tangible relief for many taxpayers—and a compliance imperative for payroll departments. With a heads-up and system adjustments, the transition can be seamless.