BUDGET REVIEW: Measures impacting individuals

13 hours ago
2 min read

4.1 Introducing a Working Australians Tax Offset

The Government will introduce a $250 Working Australians Tax Offset with effect from the 2028 income year. This new offset will provide a permanent annual tax offset for Australians for their income derived from work such as salary and wages and the business income of sole traders.

4.2 $1,000 Standard Deduction for Work-related Expenses

The Government will introduce a standard tax deduction of up to $1,000 for work-related expenses from the 2027 income year. Draft legislation and explanatory materials have been released for consultation regarding this measure: Treasury Laws Amendment Bill 2026: standard deduction for work-related expenses.

The Draft Bill proposes to amend the tax law to introduce a standard deduction of up to $1,000 for Australian tax residents who earn income from work, starting 1 July 2026. Such taxpayers will not need to itemise or substantiate work-related expenses if they are claiming no more than $1,000.

Individuals who incur work-related expenses greater than the $1,000 maximum standard deduction can continue to claim their deduction in the usual way.

Charitable donations, union and professional association membership fees and other non-work-related deductions can still be itemised separately and claimed on top of the standard deduction.

4.3 Previously announced tax cuts in 2027 and 2028

The Budget referenced the Government’s previously announced tax cuts (which have already been legislated), as follows:

The (current) 16% tax rate will be reduced to 15% from 1 July 2026.
The 15% tax rate will be further reduced to 14% from 1 July 2027.

For reference, the personal income tax rates for the 2026 income year are set out in the following table, along with the tax rates for the 2027 and 2028 income years:

Thresholds	2026 Income Year	2027 Income Year	2028 Income Year
$0 - $18,200	Tax-free	Tax-free	Tax-free
$18,201 - $45,000	16	15	14
$45,001 - $135,000	30	30	30
$135,001 - $190,000	37	37	37
$190,001+	45	45	45

4.4 Increasing the Medicare levy low-income thresholds

The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners by 2.9% from 1 July 2025 as follows:

The threshold for singles will be increased from $27,222 to $28,011.
The family threshold will be increased from $45,907 to $47,238.
For single seniors and pensioners, the threshold will be increased from $43,020 to $44,268.
The family threshold for seniors and pensioners will be increased from $59,886 to $61,623.

For each dependent child or student, the family income thresholds will increase by a further $4,338, up from the previous amount of $4,216.