What changes on 1 July 2026.Your tax, cut by cut.
The 2026-27 financial year brings a legislated income tax cut for every taxpayer and the biggest change to how super is paid in decades. Here is everything that changes. And what doesn't. In plain English.
Written by Rob, founder of AusCalc
Australian small business owner. Checked against current ATO published rates. Updated July 2026. About AusCalc
1. The 16% tax rate drops to 15%
From 1 July 2026, the marginal rate on income between $18,201 and $45,000 falls from 16% to 15%. It was legislated in 2025 and happens automatically. You don't need to do anything.
What does this mean if you earn over $45,000? Everyone who earns more than $45,000 gets the full saving. $268 per year. The cut only applies to the $18,201-$45,000 slice of your income, so anyone earning above $45,000 already has that full slice taxed at the new 15% rate, meaning they pocket the maximum $268. Higher income does not reduce your saving.
What about the brackets above $45,000? The 30%, 37% and 45% brackets are completely unchanged. Only the bottom bracket moves. See the full 2026-27 tax bracket table for every threshold and rate in one place.
A second cut follows on 1 July 2027. The rate drops again to 14%, adding another $268 saving. By 2027-28 the total benefit is $536 per year for anyone earning $45,000+.
Use our sole trader tax calculator or PAYG calculator. Both already include 2026-27 rates so you can see your exact take-home today.
2. Payday super. The big change for employers
From 1 July 2026, employers must pay super guarantee contributions within 7 business days of each payday. Not quarterly. This applies to every employer regardless of size and was passed by Parliament in November 2025.
What changed in practice: super went from a lump sum you paid four times a year to a per-pay-run cost. Money that used to sit with you for up to three months now leaves within days, so cash flow planning has to reflect it. If your payroll software is not payday super-ready, that is now urgent rather than upcoming. Use our super guarantee calculator to confirm what you owe per pay run at the 12% rate.
If you're an employee: nothing changes for you directly. Your super still accumulates at 12%. It just arrives in your fund more frequently.
3. What stays exactly the same
To be clear about what is not changing on 1 July 2026:
- The tax-free threshold stays at $18,200. No change
- The super guarantee rate stays at 12%. It hit its legislated maximum in July 2025
- The 30%, 37% and 45% brackets are unchanged
- The Medicare levy stays at 2% of taxable income
- GST stays at 10% with the $75,000 registration threshold unchanged
- The HECS-HELP repayment thresholds are indexed annually as usual. No structural change
What do you actually need to do?
Employees: Nothing. The tax cut flows through your withholding automatically. It may take a pay cycle or two for your employer's payroll software to reflect it.
Sole traders: Factor the 15% rate into your 2026-27 PAYG instalments so you don't overpay upfront. Our sole trader calculator shows your new estimated tax bill.
Employers: Payday super is already in force. Confirm your payroll software is paying super within 7 business days of each pay run, and check that contributions are being received by the fund in that window, not just sent.
Frequently asked questions
How much will I save from the 1 July 2026 tax cut?
The 16% marginal rate on income between $18,201 and $45,000 drops to 15% from 1 July 2026. If you earn over $45,000 you still get the full $268 saving. The cut applies to that bottom slice of everyone's income, so higher earners receive the maximum benefit too. A further cut to 14% follows on 1 July 2027, making the combined saving $536 per year.
What is payday super and when does it start?
From 1 July 2026, employers must pay superannuation guarantee contributions within seven business days of each payday, instead of quarterly. The legislation received royal assent in November 2025 and applies to all employers regardless of size.
Do the tax brackets or thresholds change on 1 July 2026?
The income thresholds stay the same. Only the rate on the $18,201-$45,000 bracket changes, from 16% to 15%. The 30%, 37% and 45% brackets are unchanged for 2026-27.
Does the super guarantee rate change on 1 July 2026?
No. The super guarantee rate reached its legislated maximum of 12% on 1 July 2025 and stays at 12% for 2026-27. What changes is the payment frequency, under payday super.
Sources: Australian Taxation Office. Personal income tax cuts and payday superannuation. General information only, not tax advice. Last updated 14 June 2026.