In Treasurer Jim Chalmers’ fourth federal budget, every Australian taxpayer will benefit from a tax cut, representing a significant $17 billion financial measure aimed at easing cost-of-living pressures. This initiative ensures that all individuals earning taxable income will receive “modest” relief starting July 1, 2026, with additional cuts scheduled for 2027.
The tax cuts will save the average Australian worker approximately $2,548 by the 2027-28 financial year, translating to around $50 per week. Those with taxable incomes above $18,200 will receive annual savings of up to $268 starting in 2026, with this amount increasing to $536 in 2027. This means that, when combined with previous tax cuts from the 2023-24 budget, the average Australian will have an extra $2,548 in their accounts.
While individuals earning under $18,201 will not benefit from these cuts, the plan includes significant reductions for various income brackets. For example, those earning between $45,001 and $135,000 can expect their annual taxes to decrease by amounts ranging from $1,340 to $4,265, while earners between $135,001 and $190,000 will see reductions from $4,265 to $5,065. High earners over $190,000 will be capped at a maximum saving of $5,065 each year.
The new tax structure will ease the burden on the lowest income bracket as well, where the tax rate will drop from 16% to 15% effective July 1, 2024, and further to 14% in 2027. These changes mark the most substantial reduction in rates for low-income earners in five decades.
According to Chalmers, these tax adjustments are framed within a broader $17 billion plan designed to provide responsible cost-of-living relief. This includes raising the Medicare levy low-income thresholds starting from July 1, ensuring that one million Australians either enjoy lower rates or remain exempt from the levy altogether.
It’s anticipated that these tax cuts will motivate more Australians, particularly women, to increase their work hours, contributing to a projected rise of 1.3 million total weekly work hours.
Overall, these measures reflect the Albanese government’s commitment, having successfully passed the revised stage 3 tax cuts through parliament last year, to provide significant financial relief to taxpayers while encouraging workforce participation.