2025–26 Tax Brackets Australia: Updated Rates & Smart Planning Tips

When the end of the financial year approaches, Australians start asking: How much tax will I actually pay this year? The answer depends on the Australian income tax brackets, which determine the percentage of your income that goes to the ATO.

With the 2025–26 tax brackets Australia already confirmed, now is the perfect time to understand how they work, what the Stage 3 tax cuts Australia mean for you, and how to make the most of smart tax planning.

Whether you’re lodging an income tax return Perth, running a business, or simply trying to reduce your tax liability, knowing the Australian tax income brackets is essential.

Understanding How Australia’s Tax Brackets Work

Australia operates on a progressive tax system. This means your income is split into brackets, and each portion is taxed at the corresponding rate.

For example:

• If you earn $60,000, the first $18,200 is tax-free, the next portion is taxed at 16%, and the rest at 30%.
• Only the income within each tax bracket is taxed at that rate, not your entire income.

This is why understanding how do tax brackets work Australia helps taxpayers avoid confusion and plan deductions wisely.

Stage 3 Tax Cuts Australia: What’s Changing in 2025–26

From 1 July 2024, the Stage 3 tax cuts Australia reshaped the Australia tax brackets to simplify the system and reduce tax pressure on middle-income earners. By 2025–26, these cuts remain in place and affect millions of Australians.

Key changes include:

• A 16% rate for incomes between $18,201 and $45,000 (down from 19%).
• A broad middle bracket taxed at 30% for incomes between $45,001 and $135,000.
• Fewer brackets overall, meaning a flatter, simpler system.

These changes are designed to reduce bracket creep Australia and keep taxpayers from being unfairly pushed into higher tax brackets simply due to inflation.

Updated Australia Tax Brackets 2025–26: Full Breakdown

Here’s the complete table of income tax rates Australia for residents:

This is the official Australian income tax brackets 2025–26 system.

Australian Tax Brackets 2025–26: Residents vs Non-Residents

Residency status for tax purposes is critical, as it determines which Australia tax brackets apply to you.

• Residents benefit from the $18,200 tax-free threshold.
• Non-residents do not get this threshold, and their tax starts from the first dollar earned.

Here’s the table for non-resident tax brackets Australia:

If you’re unsure of your residency status, speaking with a tax accountant Perth specialist is strongly advised, since misclassification can lead to higher taxes or penalties.

How Bracket Creep Affects Australian Taxpayers

Bracket creep Australia happens when inflation or pay rises push taxpayers into higher income tax brackets, even though their real purchasing power hasn’t improved.

For example, if your salary increases slightly each year but the Australian income tax brackets don’t adjust, you could end up paying a higher percentage of tax without being better off financially.

The government’s Stage 3 tax cuts Australia are intended to reduce the impact of bracket creep by flattening and broadening the tax brackets. Still, over time, the issue may return if tax thresholds aren’t updated regularly.

Smart Strategies to Keep Your Tax Bracket Lower

While you can’t change the Australia tax brackets 2025–26, you can take proactive steps to legally reduce your taxable income. Common strategies include:

1. Maximise deductions – Claim all eligible work-related expenses, travel, and tools.
2. Contribute to superannuation – Salary sacrificing lowers taxable income and boosts retirement savings.
3. Time your income & expenses – Defer income or bring forward deductible expenses to reduce this year’s liability.
4. Consider business structures – If you’re self-employed, a Perth accountant can help with accounting services Perth and small business tax planning.
5. Seek professional help – A tax agent Perth can ensure compliance and identify opportunities for tax savings.

If you’re not confident in managing this yourself, tax return services Perth and experienced personal tax accountants can make sure you don’t miss out on deductions.

Tax Bracket Outcomes for Low, Middle, and High Income Earners

The 2025–26 tax brackets Australia affect income groups differently:

• Low-income earners (up to $45,000): Benefit from the 16% tax rate and the $18,200 tax-free threshold.
• Middle-income earners ($45,001–$135,000): The biggest winners under Stage 3 tax cuts Australia, paying less tax overall.
• High-income earners ($135,001+): Still face higher tax rates but benefit from a broader 30% bracket, compared to older systems.

Regardless of your income, engaging with tax accounting Perth professionals can ensure you maximise refunds and avoid unnecessary tax.

Common Questions About Australian Income Tax Brackets

1. What are the Australian income tax brackets 2025–26?
They are the thresholds used to calculate how much income tax you pay. For residents, rates range from 0% to 45%.

2. Do tax brackets apply to all of my income?
No. Only the portion within each bracket is taxed at that rate.

3. What are non-resident tax brackets Australia?
Non-residents are taxed from the first dollar earned, starting at 30%.

4. How do Stage 3 tax cuts Australia affect me?
Most middle-income earners will see significant reductions in tax compared to previous years.

5. Should I use a tax accountant Perth to help with my return?
Yes. A Perth accountant can help with compliance, maximise deductions, and ensure your income tax return Perth is lodged accurately and on time.

Conclusion: Get Expert Support for Your Tax Return

The 2025–26 tax brackets Australia are simpler and more favourable for many taxpayers, thanks to the Stage 3 tax cuts Australia. But smart planning is still essential to avoid bracket creep and to minimise your tax bill.

If you need guidance with your income tax return Perth, or want tailored strategies from a personal tax accountant, the team at Palladium Financial Group is here to help. We provide comprehensive accounting services Perth, including professional tax accounting, tax planning, and tax return services Perth for individuals and businesses alike.

Disclaimer

The information in this article is general in nature and does not constitute financial, tax, or legal advice. While every effort has been made to ensure accuracy at the time of publication, tax laws and regulations may change. You should not act on the basis of this information without first obtaining advice specific to your circumstances from a qualified professional, such as a registered tax accountant Perth or financial advisor. Palladium Financial Group accepts no liability for any loss or damage arising from reliance on this content.