What changes on 1 July 2027
The second stage of the cost-of-living tax cuts is law: from 1 July 2026 the 16% rate became 15%, and from 1 July 2027 it becomes 14% (ATO). It applies to taxable income between $18,201 and $45,000, so everyone earning more than $45,000 saves the same amount: 1% of $26,800, which is $268 a year.
The thresholds and the other rates (30%, 37%, 45%) stay the same.
Take-home, 2026–27 and 2027–28
| Salary | 2026–27 | 2027–28 | Difference |
|---|---|---|---|
| $30,000 | $28,731 | $28,849 | $118 |
| $45,000 | $40,405 | $40,673 | $268 |
| $60,000 | $50,380 | $50,648 | $268 |
| $80,000 | $63,880 | $64,148 | $268 |
| $100,000 | $77,480 | $77,748 | $268 |
| $120,000 | $91,080 | $91,348 | $268 |
| $150,000 | $110,430 | $110,698 | $268 |
| $200,000 | $140,130 | $140,398 | $268 |
Below $45,000 the saving is smaller, and at low incomes the low income tax offset already wipes out most of the tax, so the cut changes little.
A worked example
On $90,000, income tax falls from $17,520 in 2026–27 to $17,252 in 2027–28. Take-home rises from $70,680 to $70,948: $268 a year, about $10 a fortnight.
Because the cut only touches the $18,201–$45,000 band, the saving in dollars is the same for anyone above $45,000, and shrinks as a share of income as income rises.
Marginal rates, before and after
| Taxable income | 2026–27 | 2027–28 | 2027–28 with 2% Medicare |
|---|---|---|---|
| $0 – $18,200 | 0% | 0% | 0% |
| $18,201 – $45,000 | 15% | 14% | 16% |
| $45,001 – $135,000 | 30% | 30% | 32% |
| $135,001 – $190,000 | 37% | 37% | 39% |
| $190,001 and over | 45% | 45% | 47% |
The Medicare levy is not part of the cut, and at low incomes the levy is reduced or nil. The low income tax offset of up to $700 still applies in 2027–28, so on $30,000 the tax bill goes from $1,070 to $952 and on $40,000 the tax bill goes from $2,695 to $2,477.
What KeptOffer assumes for 2027–28
- The 14% rate is legislated. The HELP thresholds, Medicare levy surcharge thresholds, the low-income Medicare thresholds and the super caps for 2027–28 are not published yet; they are held at their latest values and flagged under the result.
- Super guarantee stays at 12%.
Questions people ask
Will I see it in my pay?
Withholding schedules are normally updated from 1 July, so most of the saving should arrive through each pay; any difference is settled when you lodge your return.
Is this the same as the Stage 3 tax cuts?
No. Stage 3 changed the brackets from 1 July 2024. This is a further cut to the lowest rate in two steps, 2026 and 2027.