15% tax rate, a new $1,000 work deduction, a permanent $20,000 asset write-off and non-deductible ATO interest: what 2026-27 changes mean for you.
The 2026–27 income year started on 1 July 2026, and this one has more change than most. Some measures were legislated back in 2025. Others only passed Parliament in June and August 2026. Below are the changes that are now law and that matter most to individuals and small business owners, with what each one means in dollars.
The Treasury Laws Amendment (More Cost of Living Relief) Act 2025 (Royal Assent 27 March 2025) amended Schedule 7 of the Income Tax Rates Act 1986. For Australian residents the 16% rate on income from $18,201 to $45,000 becomes:
The other brackets stay the same: 30% from $45,001 to $135,000, 37% from $135,001 to $190,000 and 45% above $190,000.
What it means in dollars: the bracket is $26,800 wide ($45,000 less the $18,200 tax-free threshold). Each 1% cut is worth $268 a year to anyone earning $45,000 or more. So you pay up to $268 less in 2026–27 than in 2025–26, and up to $536 less from 2027–28. If you earn under $45,000, you save 1% of whatever you earn above $18,200. On $30,000, for example, that is $118.
Your employer's PAYG withholding should already reflect the new rate, so most people will see the saving in their pay rather than as a bigger refund.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Royal Assent 26 June 2026) inserted section 25-130 into the Income Tax Assessment Act 1997. From 2026–27, resident individuals with employment-type income (salary, wages, director's fees and similar) get a standard deduction of up to $1,000.
This is not on top of your actual claims. The $1,000 is reduced, dollar for dollar, by the work-related expenses you claim yourself, such as general work deductions, car expenses and depreciation on work equipment. Union and professional association fees and income protection premiums do not reduce it.
Planning tip: if your genuine work expenses are under $1,000, you no longer need to chase receipts for them. If they are well over $1,000, such as tools, a work car or home office costs, keep your records as you always have. The same Act also stops employees putting assets used mainly to earn salary or wages into a low-value pool from 2026–27.
For years the $20,000 threshold was renewed one year at a time. The current position:
The write-off is only for small business entities (aggregated turnover under $10 million) using the simplified depreciation rules. The threshold applies per asset, so you can write off several assets each costing less than $20,000. Assets costing $20,000 or more go into the small business pool.
What it means in dollars: a company paying tax at 25% that buys a $15,000 trailer can deduct the full $15,000 this year. That brings forward a tax saving of $3,750 instead of spreading it over the asset's life. Remember that this is a timing benefit, not free money. Only buy what the business actually needs.
Schedule 2 of the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 (Royal Assent 27 March 2025) inserted subsection 26-5(1A) into the ITAA 1997. It denies deductions for the general interest charge (GIC) and shortfall interest charge (SIC) for income years starting on or after 1 July 2025.
So 2025–26 was the first year affected, and 2026–27 is the first full year in which you will feel it at tax time. In the past, $2,000 of GIC cost someone on a 30% marginal rate about $1,400 after tax. Now it costs the full $2,000. A tax debt is now more expensive than it looks, so it often makes sense to clear it with cheaper finance or to agree a payment plan early.
Already law but starting from 2027–28: a $250 working Australians tax offset, limits on negative gearing for established residential property bought after 7.30 pm (ACT time) on 12 May 2026, and changes to the CGT discount. None of these affect 2026–27. Talk to us before you buy an investment property.
No. It applies automatically through your tax return, and employers' withholding should already reflect it.
Not both in full. Your actual work-related claims reduce the standard deduction, so the most you get from the two combined is $1,000, unless your actual expenses are higher, in which case you claim those.
It can, if the car costs less than $20,000 and is used in the business. Only the business-use portion is deductible. A car costing $20,000 or more goes into the small business pool.
No. If that interest is GIC (or SIC on an amended assessment) and relates to an income year starting on or after 1 July 2025, it is no longer deductible.
This article is general information only and does not take your personal circumstances into account. Talk to us before acting on it.
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