In the 2025-26 Federal Budget, it was outlined what personal income tax cuts we have ahead of us. These changes will benefit every Australian taxpayer.
Key facts and figures:
Relative to 2024-25 tax settings, the tax cuts are expected to provide:
- Every Australian taxpayer with a new tax cut of up to $268 in 2026–27 and up to $536 in 2027–28.
- Combined with the change in brackets in 2024-25 , this is anticipated to keep the tax to GDP ratio at or below 2023–24 levels out to 2029–30.
Tax rate cuts:
These new tax cuts lower average tax rates for all taxpayers, especially for low- and middle-income earners. The tax rate for taxable income between $18,201 and $45,000, already lowered to 16% from 1 July 2024, will drop to 15% in 2026–27 and to 14% in 2027–28. All other tax brackets remain unchanged, but the cumulative effect means more money in your pocket each year.
Encouraging workforce participation:
The Government’s combined tax cuts are expected to increase total hours worked by 1.3 million hours per week, equivalent to more than 30,000 full time jobs, compared to 2023–24 tax settings. This is expected through incentivisation for carers, part-time and lower income earners, to take on more hours of work.
Additional measures:
Part of the government’s measures to provide cost-of-living relief, these are to be provided in conjunction with energy bill relief, cheaper childcare, reducing student debt, increasing minimum and award wages and rent assistance.
To receive more clarity on these new tax cuts, and what their implementation might mean for you and your family, feel free to book a meeting with one of our expert advisers today.
Information adapted from budget.gov.au