On 1 July 2026 the first marginal tax rate in Australia dropped from 16% to 15%. It is a small change on paper, one percentage point on a single band, but it reaches almost every worker and it is now law under the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026. Here is exactly which band changed, how much you keep, and what did not move, all worked out on the 2026-27 resident scale.
Key takeaways
- The rate on income between $18,200 and $45,000 fell from 16% to 15% on 1 July 2026.
- The most anyone saves is $268 a year, which applies once you earn $45,000 or more.
- Below $45,000 the saving is 1% of what you earn over $18,200.
- The $18,200 tax-free threshold and every bracket threshold are unchanged.
- The saving reaches your pay from the first payday of the new financial year.
What actually changed
The resident tax scale has five bands. The change touched exactly one of them: the second band, which covers taxable income from $18,201 to $45,000. That band used to be taxed at 16 cents in the dollar, and from 1 July 2026 it is taxed at 15 cents. Nothing else on the scale moved. The tax-free threshold is still $18,200, the 30% band still starts at $45,001, and the top rate is still 45%. You can see the full scale in our guide to the 2026-27 tax brackets.
How much you keep
Because the cut runs across the whole $18,201 to $45,000 band, the saving builds up until your income reaches $45,000 and then stops growing. The band is $26,800 wide, and 1% of $26,800 is $268. That is the maximum, and everyone earning $45,000 or more gets the full amount. If you earn between $18,200 and $45,000, your saving is 1% of the part of your income above $18,200. So someone on $30,000 saves $118, and someone on $45,000 or above saves $268 for the year.
It is worth being clear about what the cut does not do. A high earner does not save more than a middle earner from this change, because the saving is capped at the point the band ends. Someone on $190,000 and someone on $60,000 both save the same $268, because both pass through the reduced band on their way up the scale.
The 2026-27 resident tax brackets
These are the rates that apply for the whole 2026-27 financial year. Each rate applies only to the income inside its band, not to your whole income, which is why the average rate you pay is always lower than your top rate.
| Taxable income | Tax rate (2026-27) |
|---|---|
| $0 – $18,200 | 0% (tax-free) |
| $18,201 – $45,000 | 15% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001 and over | 45% |
Tax on common salaries this year
The table below is computed straight from the 2026-27 scale. It shows the income tax on a range of salaries and the yearly saving the rate cut delivers at each level. It is tax on taxable income only, before the Medicare levy, the Low Income Tax Offset or any HECS-HELP repayment, so treat it as the bracket figure rather than your final bill. For the all-in number use the income tax calculator.
| Taxable income | Income tax (2026-27) | Saving from the cut |
|---|---|---|
| $30,000 | $1,770 | $118 |
| $45,000 | $4,020 | $268 |
| $60,000 | $8,520 | $268 |
| $80,000 | $14,520 | $268 |
| $100,000 | $20,520 | $268 |
| $135,000 | $31,020 | $268 |
| $190,000 | $51,370 | $268 |
Read the $45,000 row: the brackets produce $4,020 of tax, and the cut saves the full $268 because you have passed through the entire reduced band. From there up, the tax figure keeps climbing but the saving stays flat at $268.
What stays the same
The tax-free threshold did not change; the first $18,200 you earn is still tax-free, exactly as before. The other bracket thresholds are unchanged, the Medicare levy is unchanged, and the super guarantee stays at 12% for 2026-27. This was a rate cut on one band, not a rebuild of the scale, which is why the effect is a steady few dollars a payday rather than a dramatic shift. To see the tax cut sitting alongside the other 1 July changes, read what changed on 1 July 2026.
Frequently asked questions
Sources
All figures verified against the named document.
- ATO, Tax rates for Australian residents (the 2026-27 scale, with the 15% first marginal rate under the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026).
Last verified 25 July 2026.
