On 1 July 2026 the tax rate on income between $18,201 and $45,000 fell from 16% to 15% for Australian residents. It's legislated to fall again, to 14%, from 1 July 2027. The other brackets and the thresholds didn't change.
2026-27 resident rates
- $0 to $18,200: nil
- $18,201 to $45,000: 15% (was 16%)
- $45,001 to $135,000: $4,020 plus 30%
- $135,001 to $190,000: $31,020 plus 37%
- Over $190,000: $51,370 plus 45%
Most residents also pay the 2% Medicare levy on top.
Who saves how much
Because everyone's income passes through the $18,201 to $45,000 band, the cut is worth 1% of that band: up to $268 a year for anyone earning $45,000 or more, and less below that.
Income tax before offsets
A$4,020 + 30% × (A$90,000 − A$45,000)equalsA$17,520
Medicare levy
A$90,000 × 2%equalsA$1,800
Total
A$17,520 + A$1,800equalsA$19,320
In 2025-26 the same income paid $268 more in income tax.
Lower incomes and the LITO
At lower incomes the Low Income Tax Offset also cuts tax, by up to $700. On $30,000, tax before offsets is $1,770; the full $700 offset brings it to $1,070, plus $600 of Medicare levy.
Income tax before offsets
A$0 + 15% × (A$30,000 − A$18,200)equalsA$1,770
Less Low Income Tax Offset
− A$700equalsA$1,070
Medicare levy
A$30,000 × 2%equalsA$600
Total
A$1,070 + A$600equalsA$1,670
Sole traders and contractors
The same rates apply to business profit, but no tax is withheld from most invoices. If you're lodging your 2025-26 return, the deadline is 31 October 2026 when lodging yourself, and it uses the old 16% rate.
Tip: Employees should see slightly less tax withheld from July 2026. Contractors on PAYG instalments may want to check whether their instalment rate still fits their expected income.