Tax cuts were the most surprising element of the 2025 federal budget, which will see every single Australian taxpayer get a bit of extra cash in their payslip from mid-next year.
Treasurer Jim Chalmers handed down two “modest” tax cuts in his fourth federal budget, building on the stage 3 measures from last year.
These cuts won’t be given as a lump sum and instead you’ll see it appear gradually in your payslip, but when will they actually begin? This is what you need to know.
When will the tax cuts begin?
The first of the tax cuts – reducing the lowest tax rate from 16 to 15 per cent – will kick in on July 1, 2026, at the start of the 2026-27 financial year.
The second – a further reduction from 15 to 14 per cent – will begin the following year, on July 1, 2027.
It marks the lowest tax rate for bottom income earners in 50 years, according to the government.
How will I receive my tax cut?
You don’t need to do anything to receive the tax cut, as it will be automatically reflected in your first pay after July 1 next year, just like last year’s stage 3 tax cuts.
It will impact every person earning above $18,200.
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How much of a tax cut will I get?
The government says Australians will receive a tax cut up to a maximum of $268 a year for the first stage, beginning in July 2026.
That tax cut will increase to up to $536 when the second stage kicks in on July 1, 2027, according to the budget papers.
If you earn below $18,201, though, you won’t get a cut, because you don’t pay tax on your income as it is.
