The Stage 3 tax cuts came into effect on 1 July 2024, and for most Australians the 2025–26 financial year is the second year operating under the new rates. While the initial coverage was heavy, many people still aren't sure exactly what changed and how it affects their weekly pay. This guide explains the new rates clearly — and shows take-home pay at every salary level.
The original Stage 3 legislation (legislated under Morrison) would have given large cuts to high incomes and minimal relief to low and middle incomes. The Albanese government amended the package in early 2024 to redistribute benefits more broadly. Here's what the rates look like now in 2025–26:
The 32.5% bracket now extends to $135,000 (up from $120,000). The old 37% bracket that started at $90,000 is effectively gone for most people. This means anyone earning between $90,000 and $135,000 is now taxed at 32.5% on that income instead of 37% — saving up to $3,450/year.
These figures are for 2025–26, a resident taxpayer with no HECS debt, LITO applied, and 2% Medicare levy. Employer super (12%) is on top of the salary shown.
| Gross salary | Income tax | Medicare levy | Take-home/yr | Take-home/wk | Effective rate |
|---|---|---|---|---|---|
| $40,000 | $3,572 | $800 | $35,628 | $685 | 10.9% |
| $55,000 | $7,797 | $1,100 | $46,103 | $887 | 16.2% |
| $70,000 | $12,297 | $1,400 | $56,303 | $1,083 | 19.6% |
| $80,000 | $15,547 | $1,600 | $62,853 | $1,209 | 21.4% |
| $95,000 | $20,617 | $1,900 | $72,483 | $1,394 | 23.7% |
| $110,000 | $25,717 | $2,200 | $82,083 | $1,578 | 25.4% |
| $130,000 | $32,217 | $2,600 | $95,183 | $1,830 | 26.8% |
| $150,000 | $40,567 | $3,000 | $106,433 | $2,047 | 29.0% |
| $180,000 | $51,667 | $3,600 | $124,733 | $2,399 | 30.7% |
| $200,000 | $60,667 | $4,000 | $135,333 | $2,603 | 32.3% |
The amended Stage 3 package redistributed the cuts compared to the original design. Here's who got what:
| Income | Annual tax saving vs pre-2024 | Weekly saving |
|---|---|---|
| $40,000 | +$654/yr | +$12.58/wk |
| $60,000 | +$1,179/yr | +$22.67/wk |
| $80,000 | +$1,679/yr | +$32.29/wk |
| $100,000 | +$2,179/yr | +$41.90/wk |
| $120,000 | +$2,679/yr | +$51.52/wk |
| $135,000 | +$3,379/yr (max) | +$64.98/wk |
| $180,000 | +$3,379/yr | +$64.98/wk |
| $200,000+ | +$3,379/yr | +$64.98/wk (capped) |
The maximum annual saving under the amended Stage 3 is $3,379/year, reached at $135,000 income. Unlike the original design, incomes above $135,000 don't receive additional benefit.
Further legislated changes take effect from 1 July 2026 (the 2026–27 financial year). The 19% bracket rate drops to 15% for incomes up to $45,000, and the 32.5% bracket adjusts to 30% up to $144,000. These changes benefit low and middle income earners further.
$0–$18,200: 0% · $18,201–$45,000: 15% (down from 19%) · $45,001–$144,000: 30% (down from 32.5%) · $144,001–$190,000: 37% · $190,001+: 45%
If you have a HECS-HELP debt, your compulsory repayment is added on top of income tax and Medicare levy. This is calculated on your total repayment income and is not tax-deductible. At $95,000 with HECS, add approximately $5,225/year to the tax burden — taking your effective weekly take-home from $1,394 down to about $1,293.
Use our Pay & Tax calculator to model your exact situation including HECS, salary sacrifice, and allowances.
With marginal rates at 32.5% for most middle-income earners, salary sacrifice into super is exceptionally efficient. Contributions are taxed at just 15% inside super, meaning every dollar you sacrifice saves you the difference between your marginal rate and 15%.
At $95,000 salary: marginal rate is 32.5%, super tax is 15%, so you save 17.5 cents on every dollar sacrificed. Sacrificing $10,000/year into super costs you just $8,250 in take-home pay, but adds the full $8,500 (after 15% contributions tax) to your super balance. Net cost to you: $8,250. Net benefit to future you: $8,500 growing in super.
Enter your salary, HECS debt, salary sacrifice, and other details to see your precise weekly take-home — across 6 tax years including 2026–27.
Use the free Pay & Tax Calculator →The change happened on 1 July 2024, so by mid-2026 you've been on the new rates for two years. If you're comparing to 2022–23 or 2023–24, the difference is clear. But if you've been on the new rates all along, you may not remember what changed.
No — the Medicare levy remains at 2% of taxable income in 2025–26, with a low-income threshold of $26,000 (below which no levy applies, or a reduced levy). The Medicare Levy Surcharge (1–1.5% for high earners without private hospital cover) is separate and unchanged.
All income — salary, dividends, rental income, interest — is added together and taxed at your marginal rate. The same brackets apply. The main difference is that some investment income (capital gains held 12+ months) gets the 50% CGT discount before being added to your income.