Tax cuts for everyone! Here’s how much you’ll save.
The Government has promised income tax cuts in its 2025 Federal Budget. Here's how it'll work.
If there's one thing we all love, it's a tax cut.
The Albanese government has promised it will deliver tax cuts for most working Australians starting as early as next year.
The tax cuts will roll out over a series of two years, and will work by slightly reducing the tax rate for the lower income level.
From 1 July 2026 (the start of the new financial year), the bottom tax bracket will be reduced from the current 16% tax rate to 15% instead.
Then from 1 July 2027, it will reduce once again down to 14%.
This tax rate applies to the portion of your income between $18,201 – $45,000 (you don't pay tax on income below $18,201).
What else was promised in the 2025 Budget?
Check out our full wrap up here on all the ways you'll save.
How much will you save on tax?
In the 2026-27 financial year you'll pay 15 cents for each dollar you earn between $18,201 and $45,000, instead of the current 16 cents.
If you earn $45,000 or more you'll get the full tax cut of $268.
Then, in the 2027-28 financial year you'll pay 14 cents for each dollar you earn between $18,201 and $45,000, instead of 15 cents.
So if you earn $45,000 or more you'll get another tax saving of $268 - or $536 over 2 years.
Here's how much you'll save if you earn less than $45,000.
| Income | Tax cut over 2 years |
|---|---|
$45,000+ | $536 |
$40,000 | $436 |
$30,000 | $236 |
$20,000 | $36 |
Although the bigger tax savings are for those earning $45,000 or more, this tax cut is designed to give all tax payers a tax cut as it's applied to the lower income bracket.
If the tax cuts make it through the senate (the government needs to be re-elected first), you won't need to do anything special to apply for them.
The tax cuts will be applied to your tax return automatically.
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