The new financial year is here, and with it comes an important change to Australia’s individual income tax rates.
From 1 July 2026, the tax rate for Australian resident taxpayers earning between $18,201 and $45,000 has reduced from 16% to 15%. While this may sound like a small adjustment, it can make a practical difference to take-home pay and broader tax planning for individuals, families and business owners. The Australian Government has also confirmed a further reduction to 14% from 1 July 2027.
At Nationwide Financial, we have been helping Australians make sense of tax, accounting, financial planning, superannuation, insurance, lending and property structuring for over 35 years. Here is what you need to know for the 2026/27 financial year.
2026/27 Australian Resident Tax Brackets
The following tax rates apply to Australian residents for tax purposes for the 2026/27 financial year, excluding the Medicare levy.
| Taxable income | Tax payable |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15 cents for each $1 over $18,200 |
| $45,001 – $135,000 | $4,020 plus 30 cents for each $1 over $45,000 |
| $135,001 – $190,000 | $31,020 plus 37 cents for each $1 over $135,000 |
| $190,001 and over | $51,370 plus 45 cents for each $1 over $190,000 |
These figures are based on the legislated 2026/27 resident tax rate settings, with the key change being the reduction of the 16% bracket to 15%.
What Actually Changed From 1 July 2026?
The main change is simple: the tax rate on income between $18,201 and $45,000 has reduced from 16% to 15%.
For taxpayers earning above $45,000, the maximum benefit for the 2026/27 year is up to $268, compared with the previous 2024/25 settings.
This does not mean everyone receives the same dollar benefit. Your outcome depends on your taxable income, deductions, offsets, Medicare levy position and personal circumstances.
Does This Mean You Will Automatically Get a Bigger Tax Refund?
Not necessarily.
A lower tax rate may increase your take-home pay during the year through reduced PAYG withholding, rather than appearing as a larger refund at tax time. Your final refund or tax payable will still depend on factors such as:
- your total taxable income;
- work-related deductions;
- investment income;
- rental property income or losses;
- private health insurance and Medicare levy surcharge;
- HELP/HECS repayments;
- super contributions;
- business income, if applicable.
This is why tax planning is still important. A tax bracket change is helpful, but it is only one part of your overall financial position.
What About the Medicare Levy?
The tax bracket table above excludes the Medicare levy. Most Australian resident taxpayers pay a Medicare levy of 2% of taxable income, although reductions or exemptions may apply depending on income level and personal circumstances.
Higher-income earners without appropriate private hospital cover may also pay the Medicare levy surcharge.
What Does This Mean for Employees?
For employees, the 2026/27 tax brackets may result in slightly higher take-home pay, particularly if your payroll withholding has been updated correctly.
However, July is also the ideal time to review:
- whether your employer has your correct tax file number declaration details;
- whether you are claiming the tax-free threshold appropriately;
- whether you have multiple jobs;
- whether your HELP/HECS repayment obligations are being withheld correctly;
- whether salary packaging or salary sacrifice strategies still suit your circumstances.
Small changes made early in the financial year can help avoid surprises when you lodge your tax return.
What Does This Mean for Small Business Owners?
For business owners, the new tax brackets are only part of the picture.
The start of the 2026/27 financial year is a good time to review your business structure, drawings, wages, tax instalments, cash flow and asset planning. The $20,000 instant asset write-off remains an important measure for eligible small businesses, with the limit applying on a per-asset basis.
You should also review whether your accounting system, payroll and superannuation processes are ready for the new financial year.
Payday Super Has Started
One of the biggest changes for employers is Payday Super, which starts from 1 July 2026. Under Payday Super, employers must pay super guarantee contributions at the same time as wages, rather than quarterly. The super guarantee rate for 2026/27 is 12%.
For employers, this means cash flow planning is more important than ever. Super is no longer something to deal with at the end of the quarter. It needs to be built into every pay cycle.
For employees, Payday Super may make it easier to track whether super contributions are being paid on time.
Superannuation Caps Have Also Changed
For the 2026/27 financial year, the general concessional contributions cap has increased to $32,500. The non-concessional contributions cap has increased to $130,000.
This may create planning opportunities for people who want to build retirement savings, reduce taxable income, or make better use of superannuation as part of a long-term wealth strategy.
However, contribution caps can be complex, especially if you have multiple funds, carry-forward concessional contribution opportunities, a high super balance, or SMSF arrangements.
Should You Review Your Home Loan or Lending Structure Too?
A new financial year is also a smart time to review your broader financial commitments.
With ongoing pressure from interest rates, many Australians are reassessing their home loans, investment loans and business finance. Through our in-house lending division, Alora Finance, Nationwide Financial can assist with:
- home loans;
- investment loans;
- refinancing;
- SMSF lending;
- motor vehicle and equipment finance.
A lending review may help you understand whether your current loan structure is still competitive, whether refinancing could improve cash flow, or whether your debt structure aligns with your tax and investment strategy.
Key Tax Planning Questions for 2026/27
As you enter the new financial year, consider asking:
- Am I in the right tax bracket based on my expected income?
- Are my deductions being recorded properly throughout the year?
- Should I review my salary sacrifice or super contribution strategy?
- Is my business structure still appropriate?
- Is my investment property ownership structure still effective?
- Am I paying more interest than necessary on my mortgage or business loans?
- Do I need advice before making major financial decisions this year?
The earlier you review these areas, the more options you may have.
How Nationwide Financial Can Help
For over 35 years, Nationwide Financial has supported individuals, families and business owners with integrated advice under one roof.
Our team can assist with:
- accounting and taxation;
- financial planning;
- insurance;
- superannuation and SMSF support;
- lending through Alora Finance;
- property structuring;
- business and cash flow planning.
Rather than looking at your tax return in isolation, we take a broader view of your financial position, helping you make informed decisions across tax, wealth, lending and long-term planning.
Speak With us at Nationwide Financial
The 2026/27 tax bracket changes may appear straightforward, but the best outcomes often come from understanding how tax interacts with your income, super, investments, loans and future goals.
If you would like to review your tax position, business structure, super contributions or lending arrangements, contact us at Nationwide Financial for a personalised discussion.
Book a complimentary assessment with our team today and start the new financial year with clarity and confidence.
Disclaimer: This article is general information only and does not constitute tax, financial, legal or credit advice. Your personal circumstances have not been considered. Please speak with a qualified Nationwide Financial adviser, accountant or lending specialist before making decisions.