The 1 July 2026 Tax Cut: 16% to 15% Explained (What You'll Save)

From 1 July 2026, the second resident tax bracket — income between $18,201 and $45,000 — is taxed at 15% instead of 16%. It's the next step in the legislated personal income tax cuts.

Nothing else moves: the tax-free threshold stays at $18,200, and the 30%, 37% and 45% brackets are unchanged. The full 2026-27 resident scale is 0% up to $18,200, 15% to $45,000, 30% to $135,000, 37% to $190,000, and 45% above that.

The cut only applies to the $18,201–$45,000 band, so the saving is 1% of however much of your income falls in that band — capped at 1% of $26,800, which is $268 a year.

Roughly: about $68 a year at $25,000 of income, $118 at $30,000, $218 at $40,000, and the full $268 once you earn $45,000 or more. It's modest, but it's automatic — payroll applies it from your first pay in July without you lifting a finger.

There's another step already legislated: from 1 July 2027, the same second bracket drops again from 15% to 14%. That will add a further saving of up to $268 a year on top, for a combined cut of up to $536 a year compared with the 16% rate.

The easiest way to see the difference is to run your salary through the take-home pay calculator and compare the 2025-26 and 2026-27 results. It applies the new 15% rate along with the Medicare levy and any HELP debt so you see your real fortnightly and annual figures.