The 2026–27 tax cut: what the new 15% rate is worth to you
From 1 July 2026 the 16% bracket dropped to 15%, with 14% to follow next year. The real dollar impact by salary, and who misses out.
On 1 July 2026 the rate on the $18,201–$45,000 bracket fell from 16% to 15% — the first step of the legislated cost-of-living cuts, with a second step to 14% from 1 July 2027. Modest, universal, and worth understanding precisely rather than by headline.
What it's worth, exactly
The cut applies only to income inside the $18,201–$45,000 band, so the benefit caps out once you earn $45,000:
| Taxable income | 2026–27 saving vs 2025–26 |
|---|---|
| $25,000 | $68 |
| $35,000 | $168 |
| $45,000 or more | $268 |
Everyone from $45,000 to $450,000 gets the same $268 — about $10.30 a fortnight. When the 14% rate lands in 2027–28, the total saving doubles to $536 a year against the 2025–26 scale.
Who doesn't get it
Non-residents (taxed from the first dollar at 30%) and working holiday makers (15% flat to $45,000 already) see no change — the cut lives entirely inside the resident scale's second bracket. And if you earn under $18,200 you were paying nothing anyway.
Withholding changed on 1 July
Employers updated their withholding schedules from the first July pay run, so the cut arrives as a few extra dollars per pay, not a lump at tax time. If your take-home didn't tick up slightly in July, your payroll may be on old tables — worth a question. Our income tax calculator has both years loaded: flip the financial-year chip between 2025–26 and 2026–27 on the same salary and the difference is your personal number.
The bracket-creep context
A flat-dollar cut is really a partial refund of bracket creep — inflation pushing more of each pay rise into higher brackets while thresholds stand still. The thresholds themselves ($18,200, $45,000, $135,000, $190,000) haven't moved, so wage growth keeps lifting average tax rates between legislated cuts. That's neither good nor bad news for your planning — it's just why "tax cut years" and "quiet years" alternate, and why checking your actual take-home each July beats assuming it's unchanged.
What to do with it
$268 isn't life-changing, but redirected somewhere deliberate it's not nothing: it roughly covers a year of a streaming service creep-audit, or — for the optimisation-minded — an extra $10 a fortnight into super arrives pre-tax and compounds for decades. The calculators can show either path; the choice is yours.
This guide is general information only, current at the date shown — not tax or financial advice. Rules and rates change; check ato.gov.au or a registered tax agent for your circumstances.