For Individuals - 2026 Federal Budget: What It Means for Your Tax Return

The 2026–27 Federal Budget announced several changes that may affect everyday Australians when lodging their tax return. Whether you are an employee, a sole trader or a small business owner, here is what you need to know — in plain English.

Important disclaimer: The changes outlined in this article are proposed Budget measures and have not yet all been legislated. This is general information only and does not constitute financial or tax advice. Please contact us to discuss how these changes may affect your individual situation.

1. You may be able to claim $1,000 in work deductions without receipts

From the 2026–27 income year, eligible workers may be able to claim an instant tax deduction of up to $1,000 for work-related expenses without needing to itemise or keep receipts for each item.

This is a significant simplification for many employees who spend money on work tools, uniforms, training or other job-related costs throughout the year.

What this means for you:

• If your total work-related expenses are under $1,000, the process may become much simpler

• If your work-related expenses are above $1,000, you can still claim the full amount under the existing rules — but you will need to keep your receipts and records as usual

• Other deductions such as union fees, professional association fees, donations and income protection insurance may still be claimed separately on top of this

2. Your tax rate is being cut — starting 1 July 2026

The lowest marginal tax rate for Australian residents is being reduced in stages:

This means if you earn between $18,201 and $45,000, you will pay slightly less tax from 1 July 2026 and even less from 1 July 2027.

What this means for you:

• You do not need to do anything — the change applies automatically through your employer's payroll or when your tax return is lodged

• Lower income earners and part-time workers will benefit the most from these cuts

• Your take-home pay may increase slightly from July 2026

3. A new $250 tax offset for working Australians from 2027–28

From the 2027–28 income year, a permanent $250 Working Australians Tax Offset is proposed for people who earn income from work, including salary, wages and sole trader business income.

This offset reduces the tax you owe and works similarly to the existing Low Income Tax Offset (LITO).

What this means for you:

• This applies from next year's budget cycle — not the current 2025–26 return

• It is non-refundable, meaning it can reduce your tax to nil but cannot generate a cash refund

• Low to middle income workers will benefit most

4. If you are an employer Payday Super starts 1 July 2026

From 1 July 2026, employers will generally need to pay superannuation guarantee contributions at the same time as wages, rather than quarterly as is currently required.

This is a major change for business owners and employers.

What this means for you:

• If you employ staff, your payroll systems and cashflow processes need to be ready before 1 July 2026

• Super must be paid with each pay run — not held and paid quarterly

• Penalties may apply if contributions are late

• Speak to your accountant or payroll provider now to prepare

5. If you are on a temporary visa Medicare Levy Exemption reminder

If you hold a temporary visa and do not have access to Medicare, you may be eligible to apply for a Medicare Levy Exemption through myGov.

This exemption is free to apply for and can save you 2% of your taxable income each year — which adds up significantly.

What this means for you:

• Apply through myGov before your return is lodged

• We can assist with including the exemption in your tax return

• This applies regardless of the Budget changes — it is an existing entitlement many temporary residents overlook

What should you do now?

Most of these changes apply from 1 July 2026 onwards — meaning they will affect the tax return you lodge in the 2026–27 tax season, not the current 2024–25 return you are lodging now.

For your current 2025–26 tax return, the existing rules still apply. Make sure you:

• Keep receipts for all work-related expenses over $300

• Have records for any deductions you plan to claim

• Declare all income — including side income, ABN work, crypto or rental income

• Check whether your employer's super contributions are correct

Need help with your tax return?

At Axora Tax, we prepare and lodge individual tax returns for employees, sole traders and small business owners across Australia — including clients with rental properties, crypto, shares and ABN income.

We provide a fixed fee quote before any work begins. No surprises.

👉 Get started here — axoratax.com.au/get-started

Axora Tax | ABN 41 461 717 381 | Registered Tax Agent No. 26324756
info@axoratax.com.au | +61 0492 903 590 | axoratax.com.au

This article is general information only. It does not constitute tax, financial or legal advice. Please consult a registered tax agent before making decisions based on this information.