Federal Budget | Personal tax

Key takeaways

All Australian taxpayers will receive further personal income tax cuts from 1 July 2026.
The Medicare levy low-income thresholds will increase from 1 July 2024, providing additional cost-of-living relief to lower income individuals.

Personal income tax cuts

The Government has announced reductions to personal income tax rates from 1 July 2026. These are intended to build on the existing tax cuts that applied since 1 July 2024.

The tax cuts will be delivered by lowering the marginal tax rate for taxable income between $18,201 to $45,000. Currently at 16% for the 2024-25 and 2025-26 income years, this rate will reduce to 15% for the 2026-27 income year, and to 14% for the 2027-28 and future income years.

The thresholds and proposed changes are set out in the table below.

Table: Income tax rates for Australian tax residents

Taxable income ($)	Marginal tax rate (%) for 2024-25 and 2025-26	Marginal tax rate (%) for 2026-27	Marginal tax rate (%) for 2027-28
0 - 18,200	Nil	Nil	Nil
18,201 - 45,000	16	15	14
45,001 - 135,000	30	30	30
135,001 - 190,000	37	37	37
Above 190,000	45	45	45

The above rates do not include the Medicare levy which remains at 2%.

Medicare levy low-income thresholds

Consistent with prior years, the Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners from 1 July 2024 as follows:

the threshold for singles will increase from $26,000 to $27,222
the family threshold will increase from $43,846 to $45,907
for single seniors and pensioners, the threshold will increase from $41,089 to $43,020
the family threshold for seniors and pensioners will increase from $57,198 to $59,886, and
the family income thresholds will increase by $4,216 for each dependent child or student, up from $4,027.