A Guide to Personal Tax Cuts – 2025-26 Federal Budget

If you're wondering how the Federal Budget 2025-26 will affect your wallet, you're not alone. This year’s budget has introduced personal tax cuts aimed at easing the cost of living and encouraging economic participation. Whether you're a salaried employee or self-employed, understanding how these reforms apply to you is crucial. For expert clarity, many Australians are turning to experienced tax accountants in Melbourne to navigate these updates effectively.

Key Highlights of the Personal Tax Cuts

1. Revised Tax Brackets

The 2025-26 budget introduces significant adjustments to income tax brackets in Australia:

• The 19% tax bracket now applies up to $50,000 (up from $45,000)
• The 32.5% rate has been reduced to 30%, now covering incomes from $50,001 to $135,000
• The 37% bracket kicks in from $135,001 to $190,000
• The 45% top bracket now starts from $190,001

These changes are expected to benefit low and middle income earners, offering them tangible relief from tax burdens.

2. Low and Middle Income Tax Offset (LMITO) Adjustments

Although the LMITO officially ended in previous years, the government has indirectly compensated by adjusting tax thresholds and rates. According to tax accountants in Melbourne, this method is seen as a more transparent and sustainable form of relief.

3. Simplified Tax Filing for Individuals

To reduce administrative overhead, the ATO has launched an updated e-filing system that auto-fills more fields than ever before. This enhancement is especially useful for clients seeking quick and accurate submissions via tax accountants in Melbourne.

Who Benefits from the 2025-26 Personal Tax Cuts?

Low-Income Earners

• Increased tax-free threshold offers more take-home pay
• Enhanced support through revised tax brackets

Middle-Income Earners

• Main beneficiaries of the reduced 30% tax rate
• Families earning between $90,000 to $135,000 will see notable reductions in tax liabilities

High-Income Earners

• While benefits are less pronounced, tax simplification and adjusted thresholds still offer marginal relief

Expert Insights from Tax Accountants in Melbourne

Why You Should Speak to Tax Accountants in Melbourne

Even though the changes may seem straightforward, the details can get complex—especially for those with multiple income sources, deductions, or investments. Tax accountants in Melbourne recommend reviewing your financial strategy to maximise refunds or reduce payable tax.

Common Advice from Melbourne-Based Experts:

• Review salary packaging options
• Adjust PAYG instalments based on new tax brackets
• Consider superannuation contributions for long-term tax planning

Tips to Maximise the Benefits of Tax Cuts

• Use tax planning tools: Online calculators and budget planners
• Schedule a tax health check: Mid-year is the best time
• Organise your receipts: Claim all eligible deductions
• Work with professionals: Seek advice from trusted tax accountants in Melbourne

Plan Ahead with Tax Accountants in Melbourne

The personal tax cuts in the 2025-26 Federal Budget are a welcome change for many Australians, particularly low and middle income earners. With revised tax brackets and a more streamlined filing system, individuals stand to benefit both financially and administratively. Still, interpreting these changes for your unique situation can be tricky. That’s why it’s smart to speak with professional tax accountants in Melbourne who understand both local and national financial dynamics.