Starting from July 1, 2026, changes to personal income tax rates will be implemented. On the final day of Parliament’s session, a reduction in personal income tax rates, as detailed in the 2025-26 Federal Budget, was confirmed. This modest 1% cut affects the $18,201-$45,000 tax bracket, decreasing from the current 16% to 15% on July 1, 2026, and further to 14% in the 2027-28 fiscal year. This adjustment will result in a maximum tax saving of $268 for the 2026-27 year and $536 for the 2027-28 year. The implementation of these changes is contingent on the outcome of the Federal election on May 3, 2025, and subsequent budgetary considerations.
Medicare Levy Threshold Adjustment for Low-Income Earners
Low-income earners are exempt from the mandatory 2% Medicare levy until their assessable income surpasses a specific threshold, which varies based on whether the taxpayer is single, a pensioner, or has dependent children. Parliament has confirmed an increase to the Medicare levy threshold as announced in the Federal Budget. This change is retroactively effective from July 1, 2024, allowing taxpayers to benefit when they file their tax returns for the 2024-25 fiscal year.
