Federal Budget 2026-27 - Individuals and families

A new tax offset

Start date: 1 July 2027

The Government will provide a $250 ‘Working Australians Tax Offset’ from the 2027–28 income year.

The offset will be a permanent feature of the tax system and is aimed at taxpayers who derive income from work, such as employees who receive salary or wages and sole traders who carry on a business.

The offset basically operates to increase the effective tax-free threshold for income derived from work by nearly $1,800 to $19,985 (or up to $24,985 for workers eligible for the Low Income Tax Offset).

$1,000 instant tax deduction for workers

Start date: 1 July 2026 

During the 2025 federal election campaign the Labor party committed to introduce a $1,000 instant tax deduction for work-related expenses. On 20 April 2026 Treasury released draft legislation on this proposal for public consultation. The normal substantiation rules would not apply when claiming the standard deduction. 

Charitable donations, union fees and fees relating to professional association memberships would be claimed on top of the standard deduction. 

Taxpayers who have incurred more than $1,000 in qualifying work-related expenses can instead choose to claim their actual expenditure as a deduction, but will need to substantiate these expenses. 

Income tax cuts

Start date: 1 July 2026 

Legislation has already been passed to ensure that the 16% tax rate on taxable income between $18,201 and $45,000 will drop to 15%. The rate will then drop to 14% from 1 July 2027. 

This was announced in the 2025-26 Federal Budget. 

If you have any questions about how the 2026 Federal Budget may affect your personal finances, please contact us to discuss.