Australian Income Tax Rates 2026-27: The New 15% Bracket and What It Saves You

From 1 July 2026, Australia's second income tax bracket drops from 16% to 15%. If you earn above $45,000, you pocket an extra $268 this financial year — automatically, without doing anything. If you earn below that, the saving is smaller but still real.

This is the second in a series of tax cuts already legislated under the Stage 3-plus reforms. A third reduction to 14% follows in July 2027.

Here are the new rates, what they mean for your take-home pay, and what comes next.

2026-27 income tax rates for Australian residents

These are the official rates from 1 July 2026:

Taxable income	Tax rate
$0 – $18,200	Nil (tax-free threshold)
$18,201 – $45,000	15% (down from 16% in 2025-26)
$45,001 – $135,000	30%
$135,001 – $190,000	37%
$190,001 and over	45%

These rates do not include the Medicare levy, which adds 2% for most taxpayers on top of the rates above.

How 2026-27 rates compare to previous and upcoming years

Income bracket	2024-25	2025-26	2026-27	2027-28 (legislated)
$0 – $18,200	0%	0%	0%	0%
$18,201 – $45,000	16%	16%	15%	14%
$45,001 – $135,000	30%	30%	30%	30%
$135,001 – $190,000	37%	37%	37%	37%
$190,001+	45%	45%	45%	45%

The Stage 3 tax cuts (effective July 2024) restructured the brackets — previously this range was taxed at 19%. The 2025-26 year kept those rates unchanged. The 2026-27 and 2027-28 cuts are incremental reductions already in law.

How much does the 15% rate actually save you?

The saving is the same for every taxpayer who earns at least $45,000 — because the 1% reduction applies to the full $26,800 of income in that bracket ($18,201 to $45,000).

$26,800 × 1% = $268 per year, or $5.15 per week.

For those earning between $18,201 and $45,000, the saving is smaller:

Taxable income	2025-26 tax	2026-27 tax	Annual saving
$25,000	$1,088	$1,020	$68
$30,000	$1,888	$1,770	$118
$38,000	$3,168	$2,970	$198
$45,000+	—	—	$268

You don't need to do anything to receive this saving. Your employer's payroll software automatically applies the new rates from 1 July 2026, so your next payslip should reflect slightly higher take-home pay.

Use our Income Tax Calculator to see your exact take-home for 2026-27 at your salary, including the Low Income Tax Offset and other adjustments.

Take-home pay examples for 2026-27

All figures include the 2% Medicare levy and assume no deductions, no LITO adjustments, and no HECS-HELP debt.

Taxable income	Income tax	Medicare levy	Total tax	Take-home
$60,000	$8,520	$1,200	$9,720	$50,280
$80,000	$14,520	$1,600	$16,120	$63,880
$100,000	$20,520	$2,000	$22,520	$77,480
$120,000	$26,520	$2,400	$28,920	$91,080
$150,000	$36,570	$3,000	$39,570	$110,430
$200,000	$55,870	$4,000	$59,870	$140,130

Compared to 2025-26, every person earning $45,000+ takes home $268 more. People who also qualify for the Low Income Tax Offset may see a slightly different figure — use the calculator for your exact number.

What else changes in 2026-27

The 15% rate cut isn't the only thing changing from 1 July 2026:

Medicare levy: Unchanged at 2%. There is no change to Medicare levy thresholds or the Medicare Levy Surcharge for 2026-27.

Low Income Tax Offset (LITO): Unchanged. The LITO remains at a maximum of $700 for incomes up to $37,500, phasing out progressively to zero at $66,667. This offset reduces the tax payable for lower-income earners.

HECS-HELP repayment threshold: The minimum income before compulsory HECS repayments begin rises to $69,528 for 2026-27 (up from $54,435 in 2025-26). If you have a HECS-HELP debt and your income is below $69,528, no compulsory repayment is required for that year.

$1,000 standard deduction: Subject to passing Parliament, a $1,000 standard work deduction applies from 1 July 2026. This is separate from the rate cut — it reduces your taxable income by $1,000 if your actual work expenses are below that amount. It first appears on your 2026-27 return, lodged from July 2027. See our guide to the $1,000 standard deduction for full details.

What about 2027-28?

The second bracket rate is legislated to drop from 15% to 14% from 1 July 2027. This will save a further $268 per year for anyone earning above $45,000 — the same saving as the 2026-27 cut, applied again.

Combined with the 2026-27 saving, the total reduction across both years is $536 per year for earners above $45,000, compared to the 16% rate that applied in 2025-26.

There is no legislated rate change for the higher brackets (30%, 37%, 45%) planned beyond 2027-28 at this stage.

How marginal rates actually work

A quick reminder for anyone who's worried about a pay rise "pushing them into a higher bracket": Australia's progressive tax system means you only pay the higher rate on the income above the threshold — not on your total income.

If you earn $46,000, you pay:

• 0% on the first $18,200
• 15% on $18,201–$45,000 = $4,020
• 30% on $45,001–$46,000 = $300
• Total tax: $4,320 (plus Medicare levy)

Your effective (average) tax rate is 9.4% — well below your marginal rate of 30%. Moving from $44,000 to $46,000 doesn't suddenly make all your income taxable at 30%.

Frequently asked questions

What are the Australian income tax rates for 2026-27?

From 1 July 2026: 0% on income up to $18,200, 15% on $18,201–$45,000, 30% on $45,001–$135,000, 37% on $135,001–$190,000, and 45% above $190,000. The Medicare levy adds 2% for most taxpayers on top of these rates.

How much does the 15% tax rate save me compared to last year?

Every taxpayer earning more than $45,000 saves $268 in 2026-27 compared to 2025-26. If you earn between $18,201 and $45,000, the saving is proportionally smaller — about $1 for every $268 of income above $18,200.

When does the 14% tax rate start in Australia?

The 14% rate on income between $18,201 and $45,000 is already legislated and takes effect from 1 July 2027. It will save a further $268 per year for earners above $45,000.

Do I need to do anything to get the tax cut?

No. Your employer's payroll software applies the new rates automatically from 1 July 2026. Your regular payslip will reflect the slightly lower PAYG withholding. There's nothing you need to lodge or apply for.

How much tax do I pay on $80,000 in 2026-27?

On $80,000 with no deductions or HECS debt, the total tax is $16,120 (income tax of $14,520 plus Medicare levy of $1,600), leaving take-home pay of $63,880. Add the Low Income Tax Offset or any deductions and your actual take-home will be higher — use the calculator for your precise figure.

What is the Medicare levy for 2026-27?

The Medicare levy remains at 2% of taxable income for most Australians in 2026-27. Low-income earners may qualify for a reduced rate or exemption. The Medicare Levy Surcharge (1%–1.5% extra) applies to higher-income earners who don't hold appropriate private hospital cover — thresholds are broadly $101,000 for singles and $202,000 for families.

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This article is for general information only and does not constitute financial, tax or legal advice. Individual circumstances vary. Consult a registered tax agent or licensed financial adviser before making decisions based on this information.