Stage 3 Tax Cuts: How Much You've Actually Saved Since 2024

On 1 July 2024, every Australian taxpayer earning over $18,200 received a tax cut. Two full financial years of it are now done, 2024–25 and 2025–26. Over those two years it was worth $1,608 at $45,000 and up to $9,058 at $190,000 or more. A third year, 2026–27, is under way with a bigger cut.

The saving comes through as less tax taken from each pay, so most people never see it as a lump sum. Here is how much you have saved by income, how 2026–27 adds to it, and what to do with the difference.

Sarah's saving: $7,930 by 30 June 2027

Sarah is 36, a marketing manager in Brisbane earning $115,000. Her 2023–24 income tax (the last year before Stage 3) was $27,842. Under Stage 3 it dropped to $25,288 in 2024–25, a saving of $2,554, or about $49 a week.

She received the $2,554 twice, across 2024–25 and 2025–26: $5,108 by 30 June 2026. The 15% bottom rate lifts her saving to $2,822 in 2026–27, so by 30 June 2027 the total is $7,930. None of it needed an application or a form. The tax taken from her pay simply went down.

Stage 3 vs pre-Stage 3 brackets, side by side

The pre-Stage 3 brackets (which applied to 2023–24 and earlier years) used four marginal rates: 19%, 32.5%, 37% and 45%. Stage 3 cut the bottom rate to 16%, removed the 32.5% bracket and pushed the 37% threshold from $120,000 to $135,000. The bottom rate fell again, to 15%, on 1 July 2026.

Rates: ATO, tax rates for Australian residents. Checked 19 October 2026. A 14% bottom rate is already law from 1 July 2027.

Your saving by income, year by year

The saving stops growing at $190,000: $4,529 a year in 2024–25 and 2025–26, and $4,797 in 2026–27. Up to $135,000 it grows with income, because income between $45,000 and $120,000 is taxed at 30% instead of 32.5%, and income between $120,000 and $135,000 at 30% instead of 37%.

Income tax only. Excludes the 2% Medicare levy, the Low Income Tax Offset at lower incomes, and the Medicare levy surcharge (for singles without hospital cover, above $105,000 in 2026–27 and $101,000 in 2025–26). None of those change the Stage 3 saving. Use Velofy's Tax Calculator to model your own position, and the Medicare Levy + MLS Calculator to check whether the surcharge applies to you.

Three ways to use the saving in 2026–27

The 2024–25 and 2025–26 savings have already reached your pay. The 2026–27 saving arrives with every pay up to 30 June 2027.

1. Put it in your mortgage offset account

Money in an offset account saves interest at your home loan rate. The lowest advertised variable rates ranged from 6.29% to 6.50% on 11 October 2026. At 6.5%, every $1,000 in offset saves about $65 a year, so Sarah's $7,930 left in offset for 12 months would save about $515 in interest. That saving isn't taxed, unlike the interest on a savings account.

2. Top up super (a second tax saving)

A personal super contribution you claim as a tax deduction is taxed at 15% in the fund instead of at your marginal rate. If Sarah contributes $5,108 (her first two years of Stage 3 savings) in 2026–27 and claims it, her tax falls by about $1,635 (30% plus the 2% Medicare levy). Her fund takes $766 in contributions tax, so she is about $868 ahead, 17c for every $1, and the money stays invested until she retires.

Her employer's 12% uses $13,800 of the $32,500 concessional cap for 2026–27, so the $5,108 fits easily. To count for 2026–27, the money must reach the fund by 30 June 2027, and you need to send your fund a notice of intent to claim a deduction before you lodge. If your total super balance was under $500,000 on 30 June 2026, you can also use unused cap amounts from the previous five years; the 2021–22 amount is the oldest still available and expires on 30 June 2027.

3. Keep it in a high-interest savings account (simplest)

The best ongoing savings rates were about 5.25–5.65% a year on 19 October 2026 (Canstar), most with monthly conditions such as growing your balance. After tax at 32% (30% plus the Medicare levy), that's about 3.6–3.8%, a little below inflation of 4.0% in the year to August 2026. It still beats a transaction account that pays close to nothing.

Want to see what the saving becomes over 10–20 years? Run a monthly contribution through the compound interest calculator (it shows the inflation-adjusted real value, not just the nominal balance), or — if you invest in index funds — the ETF projection calculator models VAS, VGS, IVV and A200 using verified 5-year returns after fees.

Two myths that cost Australians money

What changed on 1 July 2026: the full list

Three things changed on 1 July 2026, and the Super Guarantee stayed where it was. Here is each one with its dollar impact:

The 1 July 2026 income tax cut, exactly

The 16% bracket between $18,200 and $45,000 dropped to 15%. That is a 1 percentage point cut on a $26,800 band of taxable income. The maximum saving is $268 a year ($26,800 × 1%), and you get the full amount once your taxable income reaches $45,000. Below $45,000, the saving is 1c for each dollar over $18,200.

Added to the original Stage 3 cut, here is your saving a year in 2026–27 compared with the pre-Stage 3 rates:

• $45,000: $804 (Stage 3) + $268 (1 July 2026) = $1,072 a year
• $80,000: $1,679 + $268 = $1,947 a year
• $100,000: $2,179 + $268 = $2,447 a year
• $135,000+: $3,729 + $268 = $3,997 a year (up to $4,797 at $190,000+)

A second cut, to 14% from 1 July 2027, is already law. It takes the bottom-band saving to $536 a year compared with 2025–26.

The super cap increase

The concessional contributions cap rose from $30,000 to $32,500 on 1 July 2026, a $2,500 increase. If you salary-sacrifice the extra $2,500:

• It reduces taxable income by $2,500. After the 15% tax your fund pays, that saves you $425, $600 or $800 a year at a 30%, 37% or 45% tax rate (each plus the 2% Medicare levy).
• It enters super taxed at 15% inside the fund — versus your marginal rate outside it.
• Invested for 25 years at 7% a year before inflation, less 0.25% in fund fees, the $2,125 left after that 15% tax grows to about $10,900, or about $4,400 in today's dollars (using the 3.7% a year ASIC sets for super calculators).

Use the salary sacrifice calculator to model the exact cents-per-$1 tax saving at your marginal rate, the super calculator for a full retirement projection, and the job offer comparison calculator if you are weighing two jobs where the super rate differs.

Payday super: how it affects you

Since 1 July 2026, employers have had to pay super each payday, and it must reach your fund within 7 business days. Before that, they could pay it quarterly. Your take-home pay doesn't change, but each contribution starts earning returns sooner. Under the quarterly cycle, super arrived on average about 77 days after payday, so each contribution is now invested roughly two months earlier.

For a 30-year-old on $90,000 (in today's dollars) with super at 12%, after the fund's 15% contributions tax, that earlier compounding adds roughly $23,000 to retirement balance over a 35-year career, or about $6,500 in today's dollars. That assumes a 7% return before inflation less 0.25% in fees, and pay rising 3.7% a year. Payday super also makes late payments easier to spot: you can check what has reached your fund in your super account or through myGov.

The Super Guarantee stayed at 12%

The Super Guarantee reached its final legislated rate of 12% on 1 July 2025, and no further rise is scheduled. The 1 July 2026 change was to when super is paid, not how much. Source: ATO — How much super to pay.

PAYG withholding vs your final tax

Employers work out the tax taken from each pay using ATO withholding tables. The ATO issued new tables for the Stage 3 rates from 1 July 2024 and for the 15% rate from 1 July 2026. If a pay or two was processed on the old tables, the difference evens out when you lodge your return.

If your 2025–26 return shows a bigger bill or refund than you expected, compare the tax withheld on your income statement in myGov with the rates above. A gap of more than about $200 is worth raising with your employer.