Tax Planning
What the New PAYG Withholding Tables Mean for Your Tax Planning in FY2026-27
PAYG withholding tables are updated from 1 July 2026, reflecting tax cuts and threshold changes—here’s how to plan ahead.
By NomadicTax Research Team • 5-8 min read • June 22, 2026
## Gain Clarity on the 2026-27 Updates
As of **1 July 2026**, Australia’s PAYG withholding tax tables will be revised to incorporate changes from the **Treasury Laws Amendment (More Cost of Living Relief) Act 2025**. The updates include:
- **Personal income tax rate cuts**, including reduction of certain rates (e.g., 16% to 15% and further cuts over time). ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
- **Indexed thresholds** for Study and Training Support Loans (STSL) and other repayment schedules. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
- Updated superannuation benefit payment caps: lump sum payments, termination payments, and income streams. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PAYGWTaxtables?utm_source=openai))
## How These Changes Affect Employees and Employers
- **Take-home pay may increase**: Lower withholding means more net income each pay cycle, especially for middle and higher earners. Plan cash flow accordingly.
- **Payroll systems must be updated**: Employers—with payroll software or external DSPs—must ensure the correct withholding schedules are active from 1 July. Incorrect tax codes or rates could lead to under-withholding.
- **Review allowances and deductions**: Since brackets shift, deductions and tax offsets may be less effective for some tax brackets. Review and adjust salary packaging or pre-tax super contributions accordingly.
## Tax Planning Opportunities
**1. Timing income—if possible**
If you control when income is received (e.g., contractors, bonus payments), accelerating or delaying receipt around 1 July 2026 may provide tax benefit depending on your marginal rate pre- and post- cut.
**2. Reevaluate salary sacrifice arrangements**
Pre-tax contributions to super or novated leasing could be more attractive with higher net pay. Ensure you account for both the rate cuts and the concessional cap to avoid surprises.
**3. Use catch-up concessional super contributions**
If you have unused concessional contribution space from prior years, consider using it to reduce taxable income—especially in the new rate environment. Be mindful of being under the cap.
## Practical Example
A full-time employee earning $100,000 per annum:
- Under old PAYG withholding rates, they might have been taxed at higher marginal rates sooner.
- From 1 July 2026, their marginal tax rate for portions of their income will fall, meaning each pay period has less withheld—more cash in hand.
- Using that cash to max out concessional super contributions or pay down high-interest debt could amplify savings.
## Recommendations
- **Talk with your payroll team or software provider** to confirm changes are implemented by 1 July 2026.
- **Review your personal or business budget**, to reflect possible increases in after-tax income.
- **Check your eligibility** for deductions, offsets, and concessional caps in light of new brackets.
These changes are not just administrative—they have real cash-flow and financial planning implications starting from commencement of the new financial year.