Living Document
This page will be updated as further changes are confirmed. Last updated: 2 July 2026.
FY2026-27 Tax Year Overview
The 2026-27 financial year runs from 1 July 2026 to 30 June 2027. While the May 2026 federal budget may introduce additional measures, several changes are already confirmed or highly expected based on existing legislation and indexation formulas.
Building on the Stage 3 structure that took effect on 1 July 2024, the legislated cost-of-living tax cuts lower the first marginal rate from 16% to 15% on 1 July 2026 (and to 14% from 1 July 2027). For anyone earning $45,000 or more, that is a tax cut of $268 per year in FY2026-27. All other rates and thresholds carry over from FY2025-26.
Confirmed Changes for FY2026-27
First Tax Rate Drops from 16% to 15%
Under the cost-of-living tax cuts legislated in 2025, the marginal rate on income between $18,201 and $45,000 falls from 16% to 15% on 1 July 2026. This delivers up to $268 in annual tax savings, with the full amount going to anyone earning $45,000 or more. A further cut to 14% is legislated for 1 July 2027. PAYG withholding schedules have been updated accordingly — see our PAYG withholding tables for the new weekly, fortnightly and monthly amounts.
Super Guarantee Stays at 12%
The Superannuation Guarantee (SG) rate reached its legislated ceiling of 12% on 1 July 2025 after a decade-long incremental increase from 9.5%. No further increases are legislated for FY2026-27 or beyond. Employers must continue paying SG on ordinary time earnings up to the maximum super contribution base.
The concessional contributions cap rises to $32,500 per year for FY2026-27, while the non-concessional cap rises to $130,000 (announced February 2026). These caps are indexed to Average Weekly Ordinary Time Earnings (AWOTE) and are rounded down to the nearest $2,500.
HECS-HELP Threshold Update
The minimum HECS-HELP repayment threshold is indexed annually. For FY2026-27, the threshold is $69,528 under the marginal repayment system, up from $67,000 in FY2025-26.
The marginal repayment system introduced in FY2025-26 will continue. You only pay the repayment percentage on income above the threshold, not on your entire income. See our HECS-HELP Guide for the full breakdown.
Medicare Levy Thresholds
The Medicare levy low-income threshold is adjusted annually. The FY2025-26 threshold is $27,222 for singles. The FY2026-27 figure will be indexed based on CPI movements and announced by the ATO before 1 July 2026.
The Medicare Levy Surcharge thresholds ($93,001 for singles, $186,001 for families) have not been indexed since 2014-15. There is no indication these will change for FY2026-27, meaning more earners are captured by the surcharge each year through bracket creep.
Expected Changes (Pending Budget Confirmation)
Tax Bracket Indexation
Australia does not automatically index income tax bracket thresholds to inflation — threshold changes require legislation. The bracket thresholds are unchanged for FY2026-27; the only legislated change is the rate cut on the first taxable bracket described above. See the current tax brackets for full detail.
The FY2026-27 brackets are:
| Taxable Income | Tax Rate |
|---|---|
| $0 – $18,200 | 0% |
| $18,201 – $45,000 | 15% (was 16%) |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
Low Income Tax Offset (LITO)
LITO provides up to $700 in tax offset for low-to-middle income earners. The offset phases out between $37,500 and $66,667. These thresholds are not automatically indexed, so any changes would require budget legislation. No changes have been flagged.
Minimum Wage — FWC Annual Review
The Fair Work Commission conducts its Annual Wage Review each financial year, typically announcing the new national minimum wage in June for effect from 1 July. The FWC's 2 June 2026 decision lifted the national minimum wage from $24.95 to $26.44 per hour ($1,004.90 per week), effective 1 July 2026, alongside a 4.75% award wage increase.
Impact on Take-Home Pay
The legislated rate cut lifts take-home pay by up to $268 a year (about $5.15 a week) for employees at the same nominal salary, with the full benefit reaching anyone earning $45,000 or more. On top of that, the indexed HECS threshold, Medicare low-income threshold, and the FWC minimum wage decision shape the final numbers.
The table below shows estimated annual take-home pay at key salary levels, assuming no HECS debt, no MLS, and resident status. These figures will be updated once FY2026-27 thresholds are confirmed.
| Gross Salary | FY2025-26 Take-Home | FY2026-27 Take-Home (Est.) | Difference |
|---|---|---|---|
| $60,000 | $50,483 | $50,751 | +$268* |
| $80,000 | $64,283 | $64,551 | +$268* |
| $100,000 | $78,083 | $78,351 | +$268* |
| $120,000 | $91,883 | $92,151 | +$268* |
| $150,000 | $109,433 | $109,701 | +$268* |
| $200,000 | $137,583 | $137,851 | +$268* |
*Reflects the legislated 16% → 15% rate cut on income between $18,201 and $45,000 from 1 July 2026. Excludes HECS, MLS, and salary sacrifice.
How to Prepare for FY2026-27
Salary Sacrifice Timing
If you are considering increasing salary sacrifice into superannuation, review your arrangements before 1 July 2026. The concessional contributions cap applies per financial year, so timing contributions strategically across the transition can maximise your tax benefit. Use our Salary Sacrifice Calculator to model different scenarios.
Super Contribution Planning
With the SG rate locked at 12%, any additional super contributions must come from salary sacrifice or personal after-tax contributions. The carry-forward rule allows you to use unused concessional cap amounts from the previous 5 years if your total super balance is under $500,000. This can be particularly valuable for one-off bonus years.
Action Item
Review your current salary sacrifice arrangements, HECS balance, and private health insurance status before 30 June 2026. Use our Income Tax Calculator to model your FY2026-27 take-home pay.
HECS Voluntary Repayments
If you hold a HECS-HELP debt, consider making a voluntary repayment before 1 June 2026 to reduce the balance before annual indexation is applied. With the indexation cap set at the lower of CPI or WPI, the rate is moderate but still adds to your debt each year.
Private Health Insurance Review
With the Medicare Levy Surcharge thresholds frozen since 2014-15, more earners cross the $93,001 threshold each year. If your income is approaching this level, compare the cost of basic hospital cover against the 1% surcharge. See our Private Health Insurance & Medicare guide for a detailed comparison.
Frequently Asked Questions
About this guide▼
Information is based on current legislation, ATO publications, and scheduled indexation formulas. Expected changes are clearly marked as estimates pending official confirmation. Take-home pay figures use FY2025-26 tax brackets and rates as a baseline. This page is updated as new information becomes available from the ATO, Treasury, and federal budget announcements.
Sources & References
- 1Individual income tax rates— Australian Taxation Office
- 2Super guarantee rate— Australian Taxation Office
- 3HELP repayment thresholds— Australian Taxation Office
- 4Medicare levy thresholds— Australian Taxation Office
Last verified: 14 March 2026. Our content is based on the latest information from official Australian government sources.
James Harrington
Verified AuthorSenior Tax & Payroll Analyst
CPA, Registered Tax Agent (25787011)
James is a CPA-qualified tax professional with over 14 years of experience in Australian taxation and payroll systems. He spent six years at the Australian Taxation Office working on PAYG withholding and individual tax return processing before moving into financial publishing. He now leads the tax content at Pay Calculator Australia, translating complex ATO legislation into clear, actionable guidance.
Areas of Expertise