đź’ˇPersonal Tax Cuts Ahead: What Every Business Owner Needs to Know
Are you ready for the changes coming to personal tax rates—and what they mean for your take-home pay and employee expectations?
With tax rates set to shift over the next few years, many Australian business owners are asking: How will this affect me, my team, and my cash flow planning? At Aero Accounting Group, we’re keeping you ahead of the curve—so you can lead with confidence, not confusion.
✅ What’s Changing? Key Tax Updates from 2026 Onwards
Confirmed in the 2025–26 Federal Budget, the Australian Government is rolling out modest but meaningful personal income tax cuts designed to ease the cost-of-living pressure for working Australians.
🔹 Personal Income Tax Cuts
From 1 July 2026, the tax rate for incomes between $18,201 and $45,000 will:
- Drop from 16% to 15%
- Then further reduce to 14% from 2027–28
🔍 Potential savings:
- Up to $268 in 2026–27
- Up to $536 from 2027–28 onwards
🔹 Medicare Levy Threshold Increase
The 2% Medicare levy won’t apply until income exceeds a new, higher threshold—especially beneficial for low-income earners.
âś… What’s great:Â
This change is backdated to 1 July 2024, meaning you’ll already benefit when lodging your 2024–25 tax return.
âś… What It Means for Business Owners
These updates aren’t just for individual taxpayers—they carry implications for employers and business owners too.
Here’s how you can stay ahead and benefit:
1. Review Your Payroll Strategy
- Understand how tax cuts impact your employees’ take-home pay
- Prepare for possible questions from your team about payslip changes post-2026
- Use this shift as an opportunity to boost staff morale and retention
2. Plan Ahead with Projections
- Factor in tax changes when planning long-term compensation packages
- Use the timing (2026–2028) to strategically prepare your business budgets
3. Support Your Team with Education
- Employees may not fully understand how these changes affect them
- Sharing clear, supportive info can set you apart as a thoughtful employer
âś… Expert Perspective: Why Timing Matters
At Aero Accounting Group, we’ve worked with countless business owners to proactively align with upcoming policy changes—and the results speak for themselves.
🧾 One client in the hospitality industry, facing tight profit margins, was able to revise their staffing budget well ahead of the 2020 super changes. That foresight saved them tens of thousands—and positioned them to reward their team competitively.
📅 With the Federal Election on 3 May 2025, there’s still some uncertainty around the final rollout of the tax cuts. But our advice? Start planning as if it’s happening, so you’re prepared either way.
âś… Stay Ahead with Aero Accounting Group
The upcoming tax changes might seem modest, but they’re a golden opportunity to refine your payroll planning, empower your team, and take control of your next few financial years.
Need help?
Not sure if your current accountant is a good long-term fit? Contact us at Aero Accounting Group today and we’ll help you minimise your taxes and maximise your profits
