The second income tax bracket drops from 16% to 15% on 1 July 2026, and again to 14% from July 2027. The most anyone gets back in 2026-27 is $268 for the year - real money, just not book-a-holiday money. Enter your income below and see your actual take-home pay this year and next, and what the cut is worth to you per week, fortnight, month or year.

Where does $268 actually matter? If you are carrying a card balance, it is roughly a month of interest on a typical revolving debt - run the balance transfer calculator and point the tax cut at the debt instead. Debt-free? Check whether your annual fee still earns its keep with the card worth-it calculator, or bank the cut through one of the best cashback credit cards on spending you were doing anyway.

Rates used: published ATO 2025-26 resident brackets, the legislated 2026-27 second-bracket rate, the 2% Medicare levy with the single low-income phase-in ($28,011 threshold), and the Low Income Tax Offset. HELP repayments and salary sacrifice are not modelled. General information only, not tax advice.

What actually changed

The rate on the second tax bracket - taxable income between $18,201 and $45,000 - falls from 16% to 15% on 1 July 2026, and to 14% on 1 July 2027. The brackets themselves do not move. Only that one rate does.

Because the change applies to a band that every taxpayer passes through, everyone earning above $45,000 gets exactly the same dollar benefit: about $268 in 2026-27, rising to about $536 a year from 2027-28, measured against 2024-25 rates. Earn $50,000 or $500,000 and the cut is the same, because the saving is capped by the size of the band, not by your income.

The maths, if you want to check it

The band runs from $18,201 to $45,000, which is $26,799 of income. A one percentage point cut on that band is:

$26,799 x 1% = $268

That is the whole explanation for the headline number. The second cut adds another percentage point on the same band, which is why 2027-28 is roughly double at $536.

If you earn less than $45,000, you get a proportionally smaller amount, because only the part of your income inside the band is affected. Below $18,201 there is no benefit, because there is no tax to cut.

What it works out to per pay

$268 a year is about $5.15 a week, or roughly $10.30 a fortnight, or $22 a month. From 2027-28, double it.

That is genuinely useful money and it is also not a change of circumstances. It is worth knowing precisely, partly so you can plan around it and partly so you can recognise the coverage that implies it is more than it is.

What the calculator does not include

  • The Medicare levy (2% for most people) and any levy surcharge, which are separate from income tax rates.
  • HECS or HELP repayments, which are calculated on repayment income and can move independently.
  • Offsets such as the low income tax offset, which change the final assessment.
  • Deductions, salary sacrifice and fringe benefits, which change your taxable income before any rate applies.
  • Anything about your specific circumstances. This is a rate calculator, not tax advice. The ATO’s own figures are authoritative, and an accountant is worth more than any calculator if your situation is not straightforward.

Making it worth more than $5 a week

A rate cut you cannot influence is the least interesting lever in your finances. For most households the controllable numbers are larger:

  • An annual fee on a card you have outgrown is often $195 to $450 a year - more than the entire tax cut. The card worth-it calculator tells you whether yours earns its keep.
  • Credit card interest at 20%-plus on even a modest revolving balance dwarfs $268. The balance transfer calculator shows what clearing it is worth.
  • Stacking cashback, card points and loyalty on spending you are already doing routinely returns several per cent. The cashback stacker puts a number on it.

Common questions

Do I need to do anything to get it?

No. If you are an employee, your employer’s withholding adjusts automatically from the start of the relevant financial year.

Why do high earners get the same amount as someone on $50,000?

Because the cut applies to one band that everyone passes through. Once your income clears $45,000, the saving on that band is fixed regardless of what you earn above it.

Is this the same as the Stage 3 tax cuts?

No, it is a separate, later change to the second bracket rate. It is legislated.

Where do the official figures come from?

The ATO publishes the rates and thresholds. This page reflects the legislated 15% rate from 1 July 2026 and 14% from 1 July 2027, checked in September 2026.