Tax
Your Take-Home Pay Changed on 1 July. Here’s What’s Worth Doing With It.
A Tax Cut That’s Too Small to Notice Is Still a Tax Cut
A tax cut that’s too small to notice is still a tax cut. I say that because most of the reaction I’ve seen to this one has been somewhere between a shrug and genuine confusion about whether it even happened.
New tax rate on income
$18,201 – $45,000
from 1 July 2026
The change is legislated
not a one-year measure
that needs renewing
Most people won’t notice
it without looking
for it specifically
What Actually Changed
From 1 July 2026, the tax rate applied to income between $18,201 and $45,000 dropped to 15%. It’s part of a run of staged cuts to that bracket over the last couple of years, and on its own it translates to a modest change in take-home pay for anyone earning in that range, or passing through it as part of a higher income. It’s genuinely small per pay cycle. It’s also permanent, and that matters more than the size of it.
Why You Might Not Have Noticed
Most people don’t notice a change like this because it doesn’t arrive as an event. There’s no letter, no lump sum, nothing that says look, here’s your tax cut. It occassionally shows up as a slightly different number on a payslip that most of us glance at rather than read properly. If your pay also moved for other reasons around the same time, a small pay rise, different hours, a bonus, the tax change gets buried in the noise completely.
Why a Small Amount Is Still Worth a Decision
Here’s the thing about small, regular amounts of money, left alone, they don’t do anything, they just fold into whatever your spending already looks like, and a year later you genuinely could not tell me where that extra few dollars a week went, because it went everywhere and nowhere at once. That’s not a character flaw, it’s just what happens to money without a job to do.
If this sounds familiar, it’s worth a look at how money coaching actually helps with decisions this size, not just the big ones.
One Practical Option: Give It a Job
The simplest version of this is picking one destination for the extra amount and sending it there automatically, the same day your pay lands, before it has a chance to blend into everything else.
- Extra into super through salary sacrifice — contributions taxed at 15% rather than your marginal rate, and compound quietly over time
- A high-interest savings account — automated, separate from everyday spending, out of sight
- Additional repayments on a debt costing you interest — the return is the interest rate you stop paying
None of these need to be the perfect choice. The point is making sure the decision gets made once, rather than never, by default, every single pay cycle for the rest of the year.
If you want a proper look at which option actually suits your situation, that’s a genuine financial advice conversation, not a guess you make on a Tuesday night.
If You’re Self-Employed
If you’re a sole trader or running your own business, this tax change still applies to you, but it won’t show up the same way as it does for someone on a payslip, because you’re not having tax withheld from a regular wage. It shows up at tax time instead, through your assessment, which means the temptation to treat it as an abstract future number rather than something to act on now is even stronger.
It’s worth factoring the change into how you’re planning PAYG instalments or setting aside for tax across the year. That’s a conversation worth having with our accounting team rather than working it out after the return is already lodged.
The Bigger Picture
None of this is going to change anyone’s life on its own, and I want to be straightforward about that rather than pretend a few dollars a week is some kind of turning point. What it can do, if you actually redirect it somewhere rather than letting it disappear, is compound quietly in the background while you get on with everything else.
That’s most of what good money coaching actually is, honestly, not dramatic overhauls, just a series of small decisions made on purpose instead of by accident.
Want help deciding what to do with the extra in your pay?
Rather than letting it disappear, we’ll talk it through and work out what actually makes sense for your situation.
Our resources page also has a few general tools if you’d like to start there.
Frequently Asked Questions
From 1 July 2026, the tax rate on income between $18,201 and $45,000 dropped to 15%. This is part of a run of staged cuts to that bracket. The change is permanent and shows up as a small increase in take-home pay per pay cycle — small enough that many people won’t immediately notice it on their payslip.
The exact amount depends on your income level, but for most people earning within or passing through the $18,201 to $45,000 bracket the change is modest — a few dollars per pay cycle. It is not a dramatic amount, but it is permanent, and that makes it worth a deliberate decision about where it goes.
The simplest approach is to give the extra amount a specific job before it disappears into general spending. Options include extra super through salary sacrifice, a high-interest savings account, or additional repayments on a debt that is costing you interest. The key is making the decision once and automating it, rather than leaving it to chance every pay cycle.
Yes, but it works differently. If you are a sole trader or running your own business, the tax cut still applies to your income in that bracket, but it won’t show up on a payslip. It comes through at tax time via your assessment instead. The practical implication is that it is worth factoring into how you plan PAYG instalments or set aside for tax across the year.