# Tax cuts 2026-27: how much more you keep

Source: https://calculatax.com/tax/tax-cuts/
Title: Tax Cuts 2026-27 Calculator: 2025-26 vs 2026-27 | Calculatax
Last updated: 2026-11-07

The 2026-27 tax cuts lower the rate on income from $18,201 to $45,000 from 16% to 15%. If your taxable income is $45,000 or more, you pay **$268 less** income tax a year than in 2025-26, about $10.31 a fortnight. The figures use Australian resident rates from the ATO's page on [new tax cuts for every Australian taxpayer](https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/personal-income-tax-new-tax-cuts-for-every-australian-taxpayer).

|  | 2025-26 | 2026-27 | 2027-28 |
|---|---|---|---|
| Income tax on $80,000 | $14,788 | $14,520 | $14,252 |
| Medicare levy | $1,600 | $1,600 | $1,600 |
| Total | $16,388 | $16,120 | $15,852 |
| Take-home pay | $63,612 | $63,880 | $64,148 |

*Resident rates, no HELP debt, $80,000 taxable income. 2027-28 figures apply the legislated 14% rate. Source: ATO.*

## What changed on 1 July 2026: 16% became 15% on income from $18,201 to $45,000

Only the lowest tax bracket changed. The tax-free threshold and the 30%, 37% and 45% rates stayed where they were. The change is law under the [Treasury Laws Amendment (More Cost of Living Relief) Act 2025](https://www.legislation.gov.au/C2025A00028).

| Taxable income | 2025-26 rate | 2026-27 rate |
|---|---|---|
| $0 to $18,200 | 0% | 0% |
| $18,201 to $45,000 | 16% | 15% |
| $45,001 to $135,000 | 30% | 30% |
| $135,001 to $190,000 | 37% | 37% |
| Over $190,000 | 45% | 45% |

*Resident tax rates. Source: [ATO tax rates for Australian residents](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents) and the 2025 Act.*

Because the bracket is lower, the tax already owed at each threshold also fell. At $45,000 it's $4,020 in 2026-27, down from $4,288. Employers started withholding at the new rate from 1 July 2026, so the cut shows up in each pay rather than at tax time.

## Who gets the full $268 and who gets less

The saving is 1 cent for every dollar of taxable income between $18,201 and $45,000. That band is $26,800 wide, so the most anyone can save in 2026-27 is $268.

| Taxable income | Tax and Medicare 2025-26 | Tax and Medicare 2026-27 | You keep more |
|---|---|---|---|
| $22,000 | $0 | $0 | $0 |
| $30,000 | $1,387 | $1,269 | $118 |
| $45,000 | $4,863 | $4,595 | $268 |
| $60,000 | $9,888 | $9,620 | $268 |

*Resident rates, after the [low income tax offset](https://calculatax.com/tax/low-income-tax-offset/), 2% Medicare levy using the latest announced thresholds (2025-26). Source: ATO.*

If your taxable income is $22,575 or less, the low income tax offset already cancelled all of your income tax in 2025-26. You pay nothing in either year, so the cut changes nothing.

In 2026-27 the offset covers income tax up to $22,866. Between $22,575 and $45,000, your saving grows by a cent for each extra dollar.

## The next cut: 14% from 1 July 2027

The same Act lowers the rate on $18,201 to $45,000 again, to 14% from 1 July 2027. That's another 1-cent cut on the same $26,800 band, worth up to $268 more a year. See every line for your salary in [what changed on 1 July](https://calculatax.com/tax/what-changed-1-july/).

Compared with 2025-26, someone earning $45,000 or more will pay $536 less in 2027-28. The ATO hasn't yet published the 2027-28 rate table, so our 2027-28 tax figures are worked out from the legislated rate.

## Tax saving at common salaries: 2025-26 vs 2026-27

| Taxable income | Total tax 2025-26 | Total tax 2026-27 | Saving a year | Saving a fortnight |
|---|---|---|---|---|
| $45,000 | $4,863 | $4,595 | $268 | $10.31 |
| $80,000 | $16,388 | $16,120 | $268 | $10.31 |
| $135,000 | $33,988 | $33,720 | $268 | $10.31 |
| $200,000 | $60,138 | $59,870 | $268 | $10.31 |

*Income tax plus 2% Medicare levy, resident rates, no HELP debt. Source: ATO.*

Everyone in the table keeps the same $268, about $5.15 a week. At $45,000 that lifts take-home pay to $40,405, and $135,000 is the top of the 30% bracket.

## Why the saving stops growing above $45,000

Income above $45,000 is taxed at 30%, 37% or 45%, and none of those rates changed. A higher earner still pays the lower 15% rate on their first $26,800 of taxable income above $18,200, which is where the whole $268 comes from. Every dollar above $45,000 is taxed exactly as it was in 2025-26.

As a share of income, the cut is larger for lower earners. $268 is 0.6% of $45,000 and 0.13% of $200,000. Your full tax for 2026-27, including offsets and HELP, is in the [tax calculator](https://calculatax.com/tax/income-tax-calculator/).

## How the 2026 cut builds on the 2024 Stage 3 changes

1. **1 July 2024: Stage 3.** Set the 16% rate on $18,201 to $45,000, along with the other brackets that still apply. The same 16% table was used for 2024-25 and 2025-26.
2. **1 July 2026: the second step.** A smaller cut, on that lowest bracket only.
3. **1 July 2027: the third step.** The 2027 cut is another step on the same bracket.

- [Tax brackets](https://calculatax.com/tax/tax-brackets/): The full rate tables for each year.
- [Salary after tax](https://calculatax.com/tax/on/): 2026-27 take-home from $20,000 to $300,000.
- [Pay calculator](https://calculatax.com/salary/pay-calculator/): Your per-pay figure.
- [Income tax in Australia](https://calculatax.com/tax/): Other changes for 2026-27.

## Tax cut questions: payslips, refunds and the 14% rate

### What are the tax cuts for 2026-27?

They lower the rate on taxable income from $18,201 to $45,000 from 16% to 15%, starting 1 July 2026. All other rates and the $18,200 tax-free threshold are unchanged. The most an Australian resident saves is $268 a year.

### Will I get the tax cut as a refund?

No. The ATO's withholding formulas changed from 1 July 2026, so employers withhold less tax from each pay. The saving arrives in your pay over the year, about $10.31 a fortnight at $45,000 or more. It doesn't appear as a separate refund.

### Do I get the tax cut if I earn under $45,000?

Partly. You save 1 cent for each dollar of taxable income between $18,201 and your income. At $30,000 that's $118 a year. If your income is $22,575 or less, the low income tax offset already cancelled your income tax, so the cut makes no difference.

### Is the 14% rate from 2027 law?

Yes. The Treasury Laws Amendment (More Cost of Living Relief) Act 2025 sets 15% for 2026-27 and 14% from 1 July 2027 on income from $18,201 to $45,000. The 14% rate adds up to $268 more a year on top of the 2026-27 cut.

### Do foreign residents get the tax cuts?

No. Foreign resident rates start at 30% from the first dollar and didn't change on 1 July 2026. The cut applies only to the resident 15% bracket. Working holiday makers pay 15% on their first $45,000 under a separate scale that was already 15%.

*Estimates only, based on published rates for 2026-27. General information, not tax or financial advice.*

## Sources

- [ATO: Tax rates: Australian residents](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents)
- [ATO: Personal income tax: new tax cuts for every Australian taxpayer](https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/personal-income-tax-new-tax-cuts-for-every-australian-taxpayer)
- [Treasury Laws Amendment (More Cost of Living Relief) Act 2025](https://www.legislation.gov.au/C2025A00028)
- [ATO: Low income tax offset](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/tax-offsets/low-income-tax-offset)