From 1 July 2026, the tax rate on the income band between $18,201 and $45,000 fell from 16 per cent to 15 per cent. It is the first of two legislated cuts — the same band drops again to 14 per cent from 1 July 2027.
Because the band is $26,800 wide, the arithmetic is simple: anyone earning $45,000 or more saves one cent in the dollar across the full band — about $268 in 2026–27, and roughly $536 a year once the second cut lands. Earn between $18,201 and $45,000 and you save proportionally less, but you still save.
What to actually do
Check your first July payslip. Employers apply the new withholding schedules automatically, but 'automatically' is doing a lot of work in that sentence — new payroll systems, new employers and manual payroll are where we see errors.
If you make quarterly PAYG instalments as a sole trader or investor, your instalments may still reflect last year's rates. They can often be varied down — legitimately — rather than waiting a year for the refund.
And remember the cut applies to taxable income. Deductions you are entitled to still matter as much as they did in June.
Information on this site is general in nature and does not constitute tax, financial or legal advice. Consider your own circumstances or contact us before acting.