Personal 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.

What’s great: 

This change is backdated to 1 July 2024, meaning you’ll already benefit when lodging your 2024–25 tax return.

Smart Investing: How Interest Deductions Can Boost Your Property Portfolio

In today’s economic landscape, with the Reserve Bank maintaining high interest rates to curb inflation, investing in property might seem daunting for those considering borrowing to build their portfolio. However, amidst these challenges, there’s a silver lining that smart investors can capitalise on: tax deductions on interest payments.

The Tax Advantage of Interest Deductions

One of the most significant advantages of investing in property is the tax deductibility of interest on loans used to finance investment properties. Unlike principal repayments, interest charges on investment property loans are fully tax deductible. This feature not only reduces taxable income but also plays a crucial role in strategies like negative gearing, where investors offset losses against other income sources.

It’s essential to note that only the interest directly attributable to the investment property can be claimed as a deduction. For investors paying both principal and interest on their loans, accurately calculating the deductible interest portion based on loan statements is key.

Expanding Deductions Beyond Acquisition

Beyond the initial property acquisition, investors can also claim deductions on interest incurred for various purposes related to the investment property. This includes financing renovations, purchasing depreciating assets like furniture, or funding repairs and maintenance. However, it’s important to differentiate these from loans for purchasing vacant land, where deductions are typically not claimable until the property is ready for rent.

Navigating Tax Compliance

Given the complexity and scrutiny around interest deductions, ensuring compliance with Australian Taxation Office (ATO) guidelines is crucial. The ATO conducts extensive audits on interest deduction claims each year, highlighting common pitfalls that investors should avoid:

• Separating Investment and Private Borrowings: Mixing loan accounts for investment and personal use complicates deduction calculations. Clear separation is necessary to accurately apportion deductible and non-deductible components.

• Optimising Tax Outcomes: Strategies like refinancing with separate loans for investment and personal properties can mimic benefits of historical split-loan approaches while minimising tax risks.

• Ownership and Deduction Allocation: Properly allocating interest expenses among co-owners of jointly owned properties is vital. Whether joint tenants or tenants-in-common, deductions should align with legal interests documented in property titles.

For personalised advice on maximising your tax benefits through property investments, consult with Aero Accounting Group. Our team specialises in navigating complex tax landscapes, ensuring you make informed decisions that optimise your financial outcomes. Whether you’re exploring investment opportunities or seeking to enhance your current property portfolio, we’re here to help you achieve your financial goals.

Book Your Consultation Today

Don’t let uncertainties in tax deductions hinder your investment potential. Contact Aero Accounting Group to schedule a consultation and discover how our expert advice can empower your investment strategy.

Your Guide to Australian Tax Cuts 2024: What You Need to Know

Definition of Tax Cut

A tax cut refers to a reduction in the rates or thresholds of income tax, resulting in a decrease in the amount of tax an individual or business is required to pay to the government. It aims to lower the tax burden on taxpayers, allowing them to retain more of their income.

As part of its efforts to alleviate cost-of-living pressures, the Australian Government has introduced significant changes to income tax rates and thresholds effective from 1 July 2024. These adjustments are designed to provide financial relief to Australian taxpayers, ensuring more money stays in their pockets.

Understanding the Changes

 Here’s a breakdown of the updated tax brackets and rates compared to the previous system:

 Impact on Taxpayers

 For example, if you earn $60,000 annually, under the previous tax rates, you would pay approximately $11,067 in tax. With the new rates, your tax liability reduces to around $9,888, saving you approximately $1,179 per year.

Automatic Adjustments

Taxpayers need not take any action to benefit from these changes. Employers will adjust Pay As You Go (PAYG) withholding tax from 1 July 2024 to reflect the new rates, ensuring your take-home pay accurately reflects the reduced tax burden.

How Aero Accounting Group Can Help

Navigating tax changes can be complex, and maximising your savings requires strategic planning. At Aero Accounting Group, we specialise in optimising tax strategies for individuals and businesses alike. Whether you need assistance understanding how these changes affect you or want to explore additional tax-saving opportunities, our expert team is here to help.

Ready to maximise your tax savings under the new rates? Contact Aero Accounting Group today for personalised advice and ensure you’re making the most of these recent tax cuts.