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 uses 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 dropped to 15% on 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: 2 August 2026

Get notified when rates change

Free alerts when minimum wage, award rates, or workplace laws are updated.

Free forever. No spam. Unsubscribe anytime.

General information and estimates only — not legal, financial or tax advice. Always check your specific award, agreement or contract, or a qualified professional, before you rely on the result.

2026-27 Tax Bracket Boost Calculator

Related Tools