2026-27 Federal Budget – Working Australians $250 Tax Offset
As part of the 2026-27 Federal Budget, the Government will introduce a $250 Working Australians Tax Offset (WATO). It will offer a permanent annual tax offset for income earned by Australian workers, including salaries, wages, and sole trader business income. This will maximise the effective tax-free threshold to about $19,985 or up to $24,985 for those eligible for the Low Income Tax Offset.
The Government estimates that over 13 million workers will benefit from the WATO for income earned from 1 July 2027. The offset will be applied automatically when tax returns are lodged.
2026-27 Federal Budget – Introducing a $1,000 instant tax deduction
The Government will amend the tax law to introduce an instant tax deduction of up to $1,000 from the 2026-27 income year, aiming to streamline the tax system and offer cost-of-living relief. Australian tax residents earning employment income will qualify and will not need to itemise work-related expenses if they claim less than $1,000.
Individuals who have work-related expenses over the instant tax deduction can still claim them in the usual way. Charitable donations, union, and professional membership fees, and other non-work-related deductions can also be itemised and claimed separately in addition to the instant tax deduction.
2026-27 Federal Budget – Modernising Private Health
As part of the 2026-27 Federal Budget, the Government announced that it will remove the age-based uplift of the Private Health Insurance Rebate from 1 April 2027. Savings from this change will be redirected to aged care to maximise residential care beds and enhance access and affordability of home care services.
The Government will also spend $3.2 million over two years from 2025–26 to implement the change and consult on further reforms to improve the private healthcare system.
2026-27 Federal Budget – Increased Medicare levy low-income thresholds
As part of the 2026-27 Federal Budget, the Government will maximise the Medicare levy low-income thresholds for families, singles, seniors, and pensioners from 1 July 2025. Individuals and families will not pay the Medicare levy if their taxable income is below the updated low-income threshold.
Medicare low-income threshold changes
| Medicare low-income threshold | Threshold as at 30 June 2025 | Threshold from 1 July 2025 |
| Singles | $27,222 | $28,011 |
| Families | $45,907 | $47,238 |
| Single – seniors and pensioners | $43,020 | $44,268 |
| Family – seniors and pensioners | $59,886 | $61,623 |
| Family – for each dependent child or student | $4,216 | $4,338 |
The increase in thresholds ensures that low-income individuals remain exempt from paying the Medicare levy or continue to pay a reduced rate.