IN EFFECT - This rate applies to the 2026–27 income year, covering income earned from 1 July 2026. A further reduction to 14% is already legislated for 1 July 2027.

The Key Change

The 16% marginal rate that applied to taxable income between $18,201 and $45,000 has been reduced to 15% for the 2026–27 income year. Every dollar earned in this bracket is now taxed one percentage point lower than in 2025–26 — worth up to $268 a year for anyone earning $45,000 or more, with a smaller saving for incomes within the bracket itself. No other resident tax bracket has changed.

Resident Tax Rates for 2026–27

Figures exclude the Medicare levy (an additional 2% for most residents) and the Medicare levy surcharge (1–1.5% for higher-income earners without private hospital cover). Different rates apply to the unearned income of children under 18 where it exceeds $416.

The Low Income Tax Offset continues to apply on top of these rates, reducing tax payable by up to $700 for incomes up to $37,500 and phasing out for incomes up to $66,667. This offset is unchanged by the current reforms.

Non-Residents and Working Holiday Makers

Non-resident rates are unaffected by this change and remain the same for both the 2025–26 and 2026–27 income years: 30% up to $135,000, 37% between $135,000 and $190,000, and 45% above that. Non-residents do not pay the Medicare levy.

Working holiday makers continue to be taxed under a separate schedule: the first $45,000 of Australian-sourced income is taxed at a flat 15%, with the remainder taxed at ordinary marginal rates.

Sources & References

PwC Tax Summaries: Australia — Individual, Taxes on personal income
Australian Government Budget:Cost of Living