Updated July 2026
July 2026 is an unusual month for Australian taxpayers: you're lodging a return under one set of rules (2025–26) while your payslip has just switched to another (2026–27). The second bracket has dropped from 16% to 15%, and a new $1,000 automatic work-related deduction has kicked in. This guide covers both years, so you know exactly which numbers apply to what.
This trips people up every July, and this year the rules actually changed at the boundary, so it matters more than usual.
| Taxable Income | Rate | Tax Payable |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 15% | 15c for each $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,020 + 30c for each $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,020 + 37c for each $1 over $135,000 |
| $190,001+ | 45% | $51,370 + 45c for each $1 over $190,000 |
| Taxable Income | Rate | Tax Payable |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 + 30c for each $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 + 37c for each $1 over $135,000 |
| $190,001+ | 45% | $51,638 + 45c for each $1 over $190,000 |
The thresholds are identical across both years — only the second-bracket rate moved, from 16% to 15%. Because that bracket spans $18,201 to $45,000 (a $26,800 band), the maximum saving is 1% of $26,800, or $268 a year, and everyone earning $45,000 or more gets exactly that. For deeper context on how the brackets got here after the Stage 3 changes, see our 2025–26 tax brackets explainer.
Your marginal rate is the tax on your next dollar; your average (effective) rate is total tax divided by total income. On $90,000 you sit in the 30% bracket, but you don't pay 30% on everything — the first $18,200 is tax-free and the next slice is taxed at 15% (or 16% last year).
2025–26 (the return you're lodging now):
2026–27 (income you're earning now):
That's a $268 saving, all from the cheaper second bracket. On $90,000, your marginal rate is 32% including Medicare, but your average rate is only about 21.5% — a distinction worth remembering whenever someone claims a pay rise will "push you into a higher bracket" and cost you money. It can't: only the dollars above each threshold are taxed at the higher rate.
Calculate Your Exact Tax for Either Year →The headline change from 1 July 2026 is the $1,000 instant work-related expense deduction. Every taxpayer with work income can claim a flat $1,000 against their 2026–27 income with no receipts, logbooks or diaries required. It's designed to spare millions of people the shoebox-of-receipts ritual for small claims.
How to think about it:
Beyond the automatic claim, the perennial deductions still matter for bigger itemisers: working-from-home running costs (fixed-rate method with hour records), work travel and vehicle use (not ordinary commuting), self-education tied to your current role, union and professional membership fees, income protection insurance premiums, and investment property costs. For a fuller strategy rundown — including timing prepayments and deductible super contributions — see how to reduce your income tax in 2026.
One practical note on timing: if you have a large expense coming up that would push you over $1,000 anyway — a laptop, a professional course, bulk tools — the year you incur it matters. An expense paid on 30 June counts against that year's income; the same purchase on 1 July counts against the next. With rates now stable across both years, choose the year where your income (and therefore marginal rate) is higher.
The Low Income Tax Offset (LITO) continues in both years: up to $700 if your taxable income is below $37,500, tapering away completely at $66,667. It's applied automatically when your return is processed — nothing to claim. Combined with the tax-free threshold, LITO means you effectively pay no income tax until your income passes roughly the low-$20,000s. (The old LMITO ended back in 2021–22 and hasn't returned.)
If you have a student loan, compulsory HELP repayments are withheld alongside tax once your repayment income crosses the annual threshold. Two things people miss: repayments are calculated on repayment income (which adds back reportable super contributions, fringe benefits and investment losses, so salary sacrificing doesn't dodge it), and the withheld amounts only get applied to your loan balance when your return is processed — not each payday. If your income hovers near a repayment band boundary, a small deduction can drop you a band and produce a surprisingly large refund.
The Superannuation Guarantee sits at 12% from 1 July 2025 — the end of the long legislated climb. That's 12% of ordinary time earnings your employer must pay on top of (or, if your contract is super-inclusive, out of) your package. Concessional contributions are taxed at just 15% inside the fund, well under most marginal rates, which is why voluntary contributions remain the single most reliable tax lever for middle and high earners. Our salary sacrifice guide walks through the mechanics, and the superannuation calculator shows what extra contributions do to your balance by retirement.
The 2025–26 year (1 July 2025 – 30 June 2026), taxed at the 16% second-bracket rate. The 15% rate and the $1,000 automatic deduction first appear in the 2026–27 return you'll lodge from July 2027.
31 October 2026 for self-lodgers. Registered tax agent clients who sign up before that date typically get until May 2027. Late lodgement can attract failure-to-lodge penalties, currently charged in 28-day blocks.
No — that's the point. From 2026–27 the flat $1,000 requires no substantiation. Receipts are only needed if you claim more than $1,000 in work-related expenses, in which case the full amount must be substantiated.
Up to $268 a year from the bracket cut alone (fully realised at $45,000+ of taxable income), plus whatever the $1,000 automatic deduction is worth at your marginal rate if you previously claimed less than $1,000 in work expenses.
No. Australia's system is marginal: only the dollars above each threshold are taxed at the higher rate. A rise from $134,000 to $137,000 taxes just the last $2,000 at 37% — the rest of your income is untouched.
No, it's a separate 2% on taxable income, added after the bracket calculation. Low-income earners get a reduction or exemption, and singles/families above the surcharge thresholds without private hospital cover pay an extra 1–1.5%.
Concessional (pre-tax) contributions and fund earnings are taxed at 15% inside the fund — usually far below your marginal rate. Withdrawals after 60 from a taxed fund are generally tax-free.
This guide is general information only and doesn't consider your personal circumstances. It is not tax advice — for advice specific to your situation, speak with a registered tax agent.