What is changing in the 2026-27 tax brackets?

The Federal Budget 2026-27 (handed down 12 May 2026) cuts the second-lowest bracket from 16% to 15%. The bracket itself ($18,201-$45,000) is unchanged. All other brackets and the tax-free threshold remain the same.

When does the tax cut take effect?

The cut applies from the first full pay period on or after 1 July 2026. Your employer will use the new PAYG withholding tables automatically from that date — you don't need to do anything.

The maximum saving is 1% × $26,800 (the size of the cut band) = $268 per year. If you earn $45,000 or more, you get the full saving. If you earn between $18,200 and $45,000, you get a proportional saving. If you earn under the tax-free threshold ($18,200), you don't pay tax in this band so the cut doesn't affect you.

Does the bracket cut interact with the new $1,000 instant work deduction?

Both start on 1 July 2026 and apply independently. The instant work deduction reduces your taxable income by $1,000 (so it's worth $1,000 × your marginal rate). The bracket cut applies to all income in the $18,201-$45,000 band. The two stack — and depending on your salary you may save several hundred dollars from both combined.

Is the bracket cut already legislated?

The 2026-27 Budget cut is confirmed legislation, having passed in May 2026. Income tax bracket changes from Budget night typically apply prospectively — this one applies from the first full pay period on or after 1 July 2026.

2026-27 Tax Bracket Boost Calculator

The 16% bracket drops to 15% from 1 July 2026. Calculate your annual tax saving and the boost to every pay packet — including how much fully lands in the cut band.

Last verified: 21 May 2026

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Tax Cuts 2025-26 — How Much You Save Under the New Tax Brackets

The 2025-26 tax cuts save you $804 to $4,529 per year depending on income. See exact savings at every salary level ($50K-$200K+), before/after bracket comparison, and calculate your new take-home pay instantly.

Federal Budget 2026-27: What It Means for Your Pay (Tax Cut, $1,000 Deduction, WATO)

The 2026-27 Federal Budget delivers three changes that hit every Australian worker's pay packet: a 15% bracket cut from 1 July 2026, a new $1,000 instant tax deduction, and the Working Australians Tax Offset from 2027-28. Exact dates and figures, with a calculator to model your take-home.

Tax Brackets 2026: $0 to $190K+ Rates

0% up to $18,200, 16% to $45K, 30% to $135K, 37% to $190K, 45% above. Enter your salary for a full breakdown with Medicare and HECS.

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FairWork Mate is an independent commercial service. We are not affiliated with, endorsed by, or associated with the Fair Work Ombudsman, the Fair Work Commission, or any Australian Government agency. Content is general information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.

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