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Personal tax rates: existing cuts for 2026–2027 and 2027–2028 unchanged (May Federal Budget 2026)

In the Budget, the Government did not announce any further changes to the personal tax rates. However, the proposed new $250 working Australians tax offset (WATO) from 1 July 2027 is expected to increase the effective tax-free threshold for income derived from work by nearly $1,800 to $19,985 (or up to $24,985 for workers eligible for the low income tax offset (LITO).

The already-legislated tax cuts announced in the 2025–2026 Budget will apply from 1 July 2026 and 1 July 2027. The resident personal income tax rate for the taxable income bracket from $18,201 to $45,000 will reduce from 16% to 15% for the 2026–2027 income year, and then to 14% for the 2027–2028 and later income years. These changes reduce the tax payable for resident taxpayers by up to $268 from 1 July 2026, rising to up to $536 from 1 July 2027.

Current rates

The tax rates and income thresholds for residents for 2025–2026 (unchanged) are:

  • taxable income up to $18,200 – nil;
  • taxable income of $18,201 to $45,000 – nil plus 16% of excess over $18,200;
  • taxable income of $45,001 to $135,000 – $4,288 plus 30% of excess over $45,000;
  • taxable income of $135,001 to $190,000 – $31,288 plus 37% of excess over $135,000; and
  • taxable income of more than $190,001 – $51,638 plus 45% of excess over $190,000.

Rates for 2026–2027

The tax rates and income thresholds for residents for 2026–2027 are:

  • taxable income up to $18,200 – nil;
  • taxable income of $18,201 to $45,000 – nil plus 15% of excess over $18,200;
  • taxable income of $45,001 to $135,000 – $4,020 plus 30% of excess over $45,000;
  • taxable income of $135,001 to $190,000 – $31,020 plus 37% of excess over $135,000; and
  • taxable income of more than $190,001 – $51,370 plus 45% of excess over $190,000.

Rates for 2027–2028

The tax rates and income thresholds for residents for 2027–2028 are:

  • taxable income up to $18,200 – nil;
  • taxable income of $18,201 to $45,000 – nil plus 14% of excess over $18,200;
  • taxable income of $45,001 to $135,000 – $3,752 plus 30% of excess over $45,000;
  • taxable income of $135,001 to $190,000 – $30,752 plus 37% of excess over $135,000; and
  • taxable income of more than $190,001 – $51,102 plus 45% of excess over $190,000.