When did the 2026–27 tax cut take effect?

From 1 July 2026 — it's already in effect. It was legislated as part of the 2025/26 Federal Budget.

How is the tax cut delivered?

Through less PAYG tax withheld from your regular pay, not a lump sum at tax time — you should already be noticing more in each paycheck since 1 July 2026.

Who benefits most from the tax cut?

Everyone earning $45,000 or more gets the same flat $268 annual saving — the benefit doesn't keep growing at higher incomes, because the 30%, 37% and 45% brackets are unchanged. Incomes between $18,200 and $45,000 get a smaller, phased-in benefit.

§ Tool · tier 1 · independent

2026 Tax Cut Estimator.

Calculates your tax cut for 2026–27 — the 16%-to-15% rate cut that took effect 1 July 2026 — compared with 2025–26, based on your income.

CalculatorFree, no signupOn-deviceupd August 2026

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Move the sliders or type your numbers in — the math updates live as you go. Click Get AI verdict when you want a written analysis.

On 1 July 2026, the second round of the government's staged income tax cuts took effect: the 16% bracket (for income between $18,201 and $45,000) dropped to 15%. All other thresholds and rates are unchanged from 2025-26. The cut is worth up to $268 a year, reached once your income hits $45,000 — it phases in gradually below that. It's delivered through lower PAYG withholding, not a lump sum, so most people are already banking it in every payslip since 1 July 2026. Use this estimator to see your exact saving compared with the old 2025-26 rates.

§ Worked examples

Real-world scenarios

Average Worker

Chris earns $90,000. For 2026–27, the calculator shows a $268 tax cut compared to 2025–26.

Chris's employer automatically reduced tax withheld from each pay from 1 July 2026, so Chris has already been taking home an extra $268 a year (about $10 a fortnight) without doing anything.

Below the Cap

Jamie earns $30,000 — below the $45,000 point where the cut maxes out. The calculator estimates a $118 tax cut for 2026–27.

Below $45,000, the cut phases in at 1% of the income earned above the $18,200 tax-free threshold ($11,800 × 1% = $118 for Jamie). Above $45,000, everyone gets the same flat $268, no matter how high their income goes.

§ FAQ

Questions Australians ask

§ Glossary

Plain-English definitions

PAYG Withholding

Tax automatically withheld from each paycheck by your employer, reflecting estimated annual tax liability.

Tax-free Threshold

The amount of income you can earn before paying tax. For 2026-27, this is $18,200 — unchanged from 2025-26.

Marginal Tax Rate

The rate of tax that applies to your next dollar earned, increasing with higher income bands.

§ Pair it with

Related tools

Income Tax Calculator

Full tax breakdown by bracket and year.

Tax Refund Estimator

Estimate your refund after tax cut changes.

Negative Gearing Calculator

See how investment losses reduce tax for 2026-27.

How to use

01Enter your annual taxable income (before tax and deductions).
02See your tax cut for the 2026–27 year compared to the old 2025–26 settings.
03Use the result to check your after-tax pay reflects what's changed since 1 July 2026.

Key info

The tax cut is worth up to $268 a year for anyone earning $45,000 or more — it doesn't keep growing above that, because only the $18,201–$45,000 bracket rate changed.
Incomes between $18,200 and $45,000 get a partial, phased-in benefit; incomes at or below the $18,200 tax-free threshold see no change.
The tax-free threshold stays at $18,200 — unchanged for 2026–27.
The change was legislated in the 2025-26 Federal Budget and took effect 1 July 2026. A further cut, to 14% on the same bracket, is legislated from 1 July 2027.

Pro tips

Check your payslip: the ATO updated withholding schedules automatically from 1 July 2026, so your take-home pay should already reflect the cut — if it doesn't, ask payroll to review it.
Use this tool to model scenarios if you expect your income to rise or fall in the 2026–27 year.
Review your total taxable income, including any bonuses, to get the most accurate result.

Avoid these

Forgetting that tax cuts AREN’T paid as a lump sum — your employer withholds less tax from each pay instead.
Assuming the old 2025-26 rate (16% on the $18,201–$45,000 bracket) still applies — it dropped to 15% from 1 July 2026.
Not including all sources of taxable income (wages, rental, investments).

Disclaimer: Estimates only. Interest rates, fees and policies change frequently. Always verify with lenders directly. General information, not personal financial advice.

Last updated · August 2026