From 1 July 2026, personal income tax rates will change.
On the last sitting day of Parliament, the
personal income tax rate reduction announced in the 2025-26 Federal Budget was confirmed.
The modest reduction of 1% applies to the $18,201-$45,000 tax bracket, reducing
from its current rate of 16% to 15% from 1 July 2026, then to 14% from 2027-28.
The saving from the tax cut represents a maximum of $268 in the 2026-27 year
and $536 from the 2027-28 year.
With a 1 July 2026 start date, the outcome
of the Federal election on 3 May 2025 and subsequent budgets will determine
whether this change comes to fruition.
Medicare levy threshold change for
low-income earners
Low-income earners do not pay the
compulsory 2% Medicare levy until their assessable income reaches the
threshold. The threshold is different depending on whether you are a single
taxpayer, pensioner, and the number of children you have that are dependent on
you.
Parliament has confirmed the increase to
the Medicare levy threshold announced in the Federal Budget. The threshold
change is backdated to 1 July 2024, which means that taxpayers will benefit
when they lodge their 2024-25 tax return.
See our Budget
2025-26 summary for details.
