2026 Tax Cuts & Superannuation
The Stage 3 Revisions are live. Here is exactly what changes in your pay packet starting July 1st.
What is Changing & When?
The Australian Taxation Office (ATO) has officially gazetted the 2026 financial year schedules.
For millions of Australians, this means the long-awaited “Stage 3 Tax Cuts” (modified version) are finally triggering. However, the complexity lies in the adjusted brackets which differ from the original 2019 plan.
Official tables released for payroll software updates.
New tax withholding rates apply to your first full pay cycle.
Superannuation Guarantee rises to 12%.
The immediate impact? Your “take-home pay” will increase slightly, but your employer must also contribute more to your retirement fund.
The New 2026 Tax Brackets
Forget the old tables. The 37% tax bracket has been effectively abolished for a huge chunk of the population.
The goal is to flatten the tax curve for middle-income earners ($45k – $135k).
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| Income Range | 2025 Rate | 2026 New Rate |
|---|---|---|
| $0 โ $18,200 | 0% | 0% |
| $18,201 โ $45,000 | 19% | 16% (Reduced) |
| $45,001 โ $135,000 | 32.5% / 37% | 30% (Unified) |
| $135,001 โ $190,000 | 37% / 45% | 37% (Cap Raised) |
| $190,001+ | 45% | 45% |
Superannuation: The 12% Reality
This is the final planned increase in the Superannuation Guarantee (SG).
Employers are now legally required to contribute 12% of your OTE (Ordinary Time Earnings) into your Super fund.
Warning for Salary Packages
If your contract says “Salary inclusive of Super”, your take-home cash pay might actually decrease by 0.5% because that money is being diverted to your Super fund.
Check your contract wording immediately:
- โ “Plus Super”: Employer pays the extra cost. (You win).
- โ “Inclusive of Super”: The cost comes out of your base pay. (You lose cash flow).
Calculator: Estimate Your Take-Home
How much extra cash will land in your bank account fortnightly?
Based on the new 2026 withholding schedules, here are the estimates for common salary bands (excluding Medicare Levy).
These figures are “tax cuts only” and do not account for inflation or HECS/HELP debt indexation.
Don’t Miss the “Carry-Forward” Rule
With the tax rates dropping, tax deductions become slightly less valuable for some (since you are claiming back at 30% instead of 32.5%).
However, the biggest opportunity for 2026 is the Concessional Cap Carry-Forward.
If your Super balance is under $500,000, you can use unused caps from the last 5 years to make a massive tax-deductible contribution this year.
Why do it now? Because if you expect your income to rise into the $190k+ bracket next year, saving the deduction might be better. But for most, topping up Super now is the best way to reduce taxable income.
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Official ATO Resources
Use these official calculators to check your exact position. Do not rely on third-party estimates for payroll setup.
FAQ: 2026 Tax Changes
No. The LMITO has been permanently removed and replaced by the structural tax cuts (the 30% bracket) designed to be a permanent fix rather than a temporary offset.
It depends on your contract. If your salary package is “Inclusive of Super”, then yes, your cash pay drops by 0.5%. If it is “Plus Super”, your employer pays the extra.
You do not need to do anything. Your employer’s payroll software (Xero, MYOB, etc.) will automatically update the tax withholding tables by July 1st.
The SAPTO (Seniors and Pensioners Tax Offset) thresholds have been adjusted slightly, meaning seniors can earn more before paying Medicare Levy, but the main tax cuts benefit working-age income earners most.
