Tax Changes Coming in 2026: What You Need to Know

by | Dec 17, 2025 | Uncategorized | 0 comments

As we close in on the end of the year, several important tax changes will take effect in 2026. Whether you’re an individual taxpayer, a small business owner, or an employer, here’s what you need to prepare for:

  1. Personal Income Tax Cuts
  • From 1 July 2026, the tax rate on income between $18,201 – $45,000 reduces from 16% to 15%, and from 1 July 2027, further down to 14%. [ato.gov.au], [budget.gov.au]
  • These staged cuts aim to ease bracket creep and provide financial relief. The average taxpayer stands to gain around $2,229 in 2026–27 and $2,548 in 2027–28—a weekly benefit of about $50. [budget.gov.au]
  1. Payday Superannuation
  • Starting 1 July 2026, employers must deposit super contributions at each payday, instead of quarterly. This is known as “Payday Super”.[ato.gov.au], [au.finance.yahoo.com]
  • The aim is to ensure timely contributions and help employees grow their retirement savings faster; it could add up to an extra $6,000 for a 25-year-old over a lifetime. [au.finance.yahoo.com]
  1. Superannuation For High-Balance Accounts (Division 296)
  • From 1 July 2026, a new Division 296 tax comes into effect: earnings above a $3 million super balance will be taxed at an additional 15%, making the total tax rate effectively 30%.
  • Those with balances over $10 million will face an effective rate of 40% on income above this threshold. [dailymoss.com], [houseofwealth.com.au]
  • Importantly, this tax applies only to realised earnings, not unrealised gains. [houseofwealth.com.au]
  1. Instant Asset Write‑Off for Small Businesses
  • The current extended threshold of $20,000 per asset remains in place until 30 June 2026, following legislation passed in 2025. [ato.gov.au], [dglaccount…nts.com.au]
  • Small businesses with turnover under $10 million can immediately deduct the full cost of each eligible asset (under $20k) purchased and installed during the 2025–26 year. [ato.gov.au], [nanakaccou…nts.com.au]
  1. Continued ATO Compliance Focus
  • Increased ATO funding aims to bolster enforcement of super and tax obligations from mid-2026 onwards. [australiansuper.com]
  • This includes extra oversight for unpaid super liabilities and shadow economy activity. [my-tax-acc…ant.com.au]

 

What This Means for You

Category Key Actions
Individuals Check tax withholding; plan for income bracket changes
Employers Update payroll systems for payday super and FBT
Small Businesses Time equipment purchases to maximise instant write-off
High Net-Worth Individuals Reassess super strategies—balance thresholds may change

 

Final Word

The tax landscape in 2026 will bring meaningful changes—from tax relief for middle-income earners and faster super contributions, to new taxes for high-balance super accounts and stronger ATO compliance efforts. Planning ahead is key:

  • Review payroll systems for payday super.
  • Time purchases to benefit from the instant write-off.
  • Re-evaluate super balances to manage Division 296 exposure.
  • Stay informed on future legislative tweaks after July.

Need help navigating these changes or planning your tax strategy? Reach out to us at Advisory One—we’ll ensure you maximise benefits and stay compliant in the new year.