Tax Cut Calculator Australia 2026-27
Estimate how much tax you save from the Australian Government's tax cuts. Compare your income tax, Medicare levy, take-home pay and effective rate across the 2025-26, 2026-27 and 2027-28 financial years.
Tax Cut Calculator
Estimate how much tax you save under the 2026-27 and 2027-28 tax cuts compared to 2025-26 settings.
| Financial year | 2025-26 | 2026-27 | 2027-28 |
| Income tax | $17,788.00 | $17,520.00 | $17,252.00 |
| Medicare levy | $1,800.00 | $1,800.00 | $1,800.00 |
| Total tax | $19,588.00 | $19,320.00 | $19,052.00 |
| Take-home pay | $70,412.00 | $70,680.00 | $70,948.00 |
| Effective rate | 21.8% | 21.5% | 21.2% |
| Tax cut | — | $268.00 | $536.00 |
Assumes single, has private hospital cover, no HECS-HELP debt, Australian resident.
What Are the Australian Tax Cuts?
The Australian Government has delivered three rounds of personal income tax cuts since 2024-25, reshaping the marginal tax brackets that apply to most workers. The first round took effect in July 2024, the second round (announced in the 2025-26 Budget) lowered the 16% bracket to 15%, and the third round lowered it further to 14% from July 2027. These changes mean most Australians pay less tax on the same income year after year.
How the Tax Cut Calculator Works
Enter your annual salary and the calculator instantly compares your tax outcome across three financial years:
- 2025-26: the baseline year, with the 16% second bracket.
- 2026-27: the 15% second bracket plus updated Medicare low-income thresholds.
- 2027-28: the 14% second bracket — the largest saving for most earners.
For each year the tool shows your income tax, Medicare levy, total tax, take-home pay and effective tax rate, plus the dollar value of the tax cut compared with the 2025-26 baseline.
How Much Tax Will You Save?
Most full-time workers on typical Australian salaries ($70,000 – $120,000) will save roughly $1,500 to $3,000 per year by 2027-28 compared with 2025-26. The savings come from:
- The lower tax rate in the second bracket (16% → 15% → 14%)
- The widened 30% bracket threshold
- Updated Medicare levy low-income thresholds
Example: Tax Cut on a $90,000 Salary
A single Australian resident earning $90,000 with private hospital cover and no HECS-HELP debt pays approximately the following under the new settings:
- 2025-26: around $19,447 in income tax (effective rate ~21.6%)
- 2026-27: around $18,947 in income tax (effective rate ~21.1%)
- 2027-28: around $18,447 in income tax (effective rate ~20.5%)
That is a total tax cut of roughly $1,000 per year by 2027-28 — real money back in your pocket every single payday.
Frequently Asked Questions
Who benefits from the 2026-27 tax cuts?
Every Australian resident taxpayer earning above the $18,200 tax-free threshold benefits. The largest dollar savings go to those in the middle tax brackets, while higher earners benefit from the lowered 37% bracket threshold.
When do the tax cuts take effect?
The second round took effect on 1 July 2026 (for the 2026-27 financial year) and the third round takes effect on 1 July 2027 (for 2027-28). If you're on PAYG, your employer applies the new withholding rates automatically from the first payday in each new financial year.
Does the Medicare levy reduce my tax cut?
The Medicare levy (2% of taxable income) is separate from income tax and still applies. However, the Government has also increased the Medicare levy low-income thresholds, so low and middle earners keep more of their income before the levy applies.
Is the tax cut the same for everyone?
No. Because Australia uses a progressive tax system, the dollar value of your tax cut depends on your income. Use the calculator with your exact salary to see your personalised saving.
Will my take-home pay increase automatically?
Yes. For PAYG employees, the ATO updates the weekly and fortnightly withholding tables, and your employer uses them from the first pay period of the new financial year. You'll see the increase on your first payslip without doing anything.