Millions of Aussies to get $500 back as tax benefits kick in within days

Millions of Australians will be almost $500 better off as two major tax changes come into effect from July 1 – and there are more on the horizon.

Labor’s federal budget in May included a new $1000 instant tax deduction for workers, and confirmed a previously announced cut to the lowest income tax bracket.

The instant tax deduction will allow about 6.2 million workers, or 42 per cent of all taxpayers, to lower their taxable income by $1000 without having to provide any receipts. 

This will put an average of $205 back into their pockets, when they lodge their 2026-27 tax return. 

On top of that, under a “top-up” tax cut announced in the lead-up to last year’s federal election, the 16 per cent rate on taxable income between $18,201 and $45,000 will be reduced to 15 per cent. 

That means every taxpayer will receive up to $268 back over the course of the financial year.

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Between the two, the average worker will enjoy an extra $473 in their pockets for 2026-27.

However, that figure will increase the following year.

The rolling tax cut will drop the rate on the lowest tax bracket further to 14 per cent on July 1, 2027, saving every Australian up to an extra $268 for the year.

A brand new tax cut will also come into effect on that date: the working Australians tax offset (WATO), which was handed down in this year’s budget.

It will provide an estimated 13 million workers with up to $250 off their final tax bill for the year. 

All up, this is expected to save an average worker almost $1000 from 2027-28.

This tax relief has been tied to the changes to the capital gains tax and negative gearing, which are currently in a bill before the Senate and are expected to pass with the support of the Greens within the fortnight. 

The Australian Tax Office has today warned against taxpayers lodging early, saying it leads to issues in about 595,000 tax returns.  

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“Many taxpayers assume getting in first means getting a faster refund, but that is not always the case,” ATO assistant commissioner Anita Challen said.

“Early lodgment increases the likelihood of missing information and mistakes being made, which can delay processing and require amendments.”

Correction: An earlier version of this story stated workers would receive up to $2000 in tax benefits from July 1, 2026.