From 1 July 2026, several significant tax and superannuation rule changes will take effect in Australia that will impact millions of workers and employers. The two major reforms are changes to personal income tax rates and the introduction of the Payday Super system.
These changes aim to increase take‑home pay for workers and make superannuation (retirement savings) more timely and transparent.
Personal Income Tax Cuts from 1 July 2026
One of the biggest changes affecting workers is the reduction in personal tax rates:
- The tax rate on income between $18,201 and $45,000 will be reduced from 16% to 15% starting 1 July 2026. This is part of staged tax reforms designed to give lower‑income and middle‑income earners more disposable income.
- This change means many workers will pay less tax overall and receive a small increase in their take‑home pay each pay period.
There are no other changes to the main tax brackets or thresholds at this time, although a further drop to 14% for this bracket is scheduled for 1 July 2027. These tax cuts directly benefit everyday workers by reducing the amount of tax withheld from wages and salaries.
Introduction of Payday Super from 1 July 2026
The second major reform from 1 July 2026 is the introduction of Payday Super, which changes when employers must pay compulsory superannuation (super) contributions for their employees:
- Under the new Payday Super rules, employers must make super contributions at the same time as they pay employees’ wages or salary, rather than quarterly.
- These contributions must reach the employee’s super fund within 7 business days of the payday, making retirement savings more regular and reducing late payments.
- There is an exception for new employees or new super funds in the first contribution, where employers may have up to 20 business days.
This is the biggest update to employer super obligations in many years and fundamentally changes how super payments are administered. Employers must prepare their payroll systems and processes to meet these new deadlines.
Other Important Changes for Workers and Employers
Alongside tax rate cuts and Payday Super, other changes workers and employers should know about include:
- Employers will need to update payroll systems to handle more frequent super contributions and reporting requirements.
- The Small Business Superannuation Clearing House service will no longer be available from 1 July 2026, meaning employers using this system must switch to other compliant payment methods.
- The Australian Taxation Office (ATO) will monitor compliance more closely and may enforce penalties for late or missed super payments under the new regime.
Summary of Key Changes
| Change Category | Detail | Effective Date |
|---|---|---|
| Income Tax Cuts | Tax rate on $18,201–$45,000 drops from 16% to 15% | 1 July 2026 |
| Payday Super Implementation | Employers pay super with wages; contributions must reach fund within 7 business days | 1 July 2026 |
| Payroll & Compliance Updates | Employers revise payroll systems and processes; Small Business Clearing House closes | 1 July 2026 |
How These Changes Affect Workers
More Take‑Home Pay
Workers earning between $18,201 and $45,000 will see more of their income retained due to the lower tax rate. This can help with everyday living costs and budgeting.
Faster Super Contributions
Under Payday Super, super contributions will be paid and received more often. This means workers’ retirement savings are built more consistently instead of waiting until quarterly payments.
Improved Transparency
More frequent reporting and payments allow workers to see contributions sooner, helping them track and manage superannuation more effectively.
The tax and superannuation changes starting 1 July 2026 mark one of the most significant shifts for workers and employers in Australia in recent years. Lowering the tax rate for many workers offers a modest boost to take‑home pay, while Payday Super ensures superannuation contributions are paid more quickly and regularly. Workers should benefit from improved cash flow and more consistent retirement savings, while employers must prepare their payroll systems to comply with the new rules.
FAQs
What is the main tax change from 1 July 2026?
The main tax change is that the personal income tax rate on income between $18,201 and $45,000 is reduced from 16% to 15%.
What does Payday Super mean for workers?
Payday Super means employers must pay super contributions at the same time as wages, and these must reach the employee’s fund within 7 business days.
Will all tax brackets change from 1 July 2026?
No. Only the tax rate for the $18,201–$45,000 bracket changes in 2026; other tax brackets remain the same until further updates.