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)
- Indexation of Study and Training Support Loan (STSL) repayment thresholds. (softwaredevelopers.ato.gov.au)
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)
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)
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.