New 2025-26 Tax Rates in Australia for Businesses and Individuals

The new tax rates in Australia for 2025-26 affect people and firms. Knowing them helps plan money, costs, and savings. Tax changes can change how much is paid. Understanding them can save money and stop mistakes.

For businesses, knowing tax rules supports growth and keeps them legal. People can plan superannuation, deductions, and investments to lower taxes. Planning well in 2025-26 helps use all the benefits. Staying aware makes taxes easier and more clear.

Overview of Tax Rates in Australia

Progressive Tax System

Australia uses a system where higher income pays more tax. Small changes in rates can affect both people and firms. The government may change rates to suit the economy. Knowing rates helps plan personal and business budgets. Planning taxes ahead gives fewer surprises.

Residents and Non-Residents

Tax rates can differ for residents and non-residents. Residents usually pay less tax on Australian income. Non-residents may pay more tax on dividends or interest. Knowing your status helps work out taxes right. This keeps you within all tax rules.

Individual Tax Rates in Australia 2025-26

The 2025-26 Tax Rates in Australia for individuals include multiple brackets. Rates depend on income and residency.

• Up to 25,000 AUD: 0–10% tax. Low-income earners may claim rebates.

   

• 25,001–50,000 AUD: 10–20% tax. Deductions can lower total tax.

   

• 50,001–120,000 AUD: 20–30% tax. Super contributions reduce taxable income.

   

• 120,001–180,000 AUD: 30–35% tax. Planning can reduce payable tax.

   

• Above 180,000 AUD: 35–45% tax. Tax offsets may lower the amount.

   

Planning Individual Taxes

Using deductions, rebates, and offsets can cut the tax you pay. Adding money to a super lowers taxable income. Timing gains on investments may cut tax bills. These steps match the 2025–26 Tax Rates in Australia. Planning early keeps your money more clear.

Business Tax Rates in Australia 2025-26

Business taxes differ by size and type.

• Small businesses: 25–27% tax on profits. Incentives may lower rates further.

   

• Medium businesses: 30% tax on profits. Planning deductions can reduce taxes.

   

• Large corporations: 30–33% tax on profits. Some sectors may get incentives.
  

Business Tax Planning

Companies can reduce taxes using strategies:

• Structure companies to use lower rates.

   

• Claim all allowed business deductions.

   

• Plan depreciation and capital allowances.

   

• Use government incentives for eligible sectors.

   

Strategic planning helps manage cash flow and legal obligations. Staying updated ensures correct tax reporting.

Medicare and Other Levies

• People may pay a Medicare levy of 2–2.5%. This helps fund Australia’s public health care.

   

• High-income earners may pay a bit more. An extra tax is based on income levels.

   

• Some may face extra or special levies. These can include industry or budget repair taxes.

   

• Knowing all taxes helps avoid large bills. Being aware keeps finances under control.

   

• Planning can help manage income each month. Budgeting for taxes ensures smooth cash flow.
  

Superannuation and Tax Implications

• Super contributions can lower taxable income. Money grows over time for retirement.

   

• Employer contributions are taxed at lower rates. This makes super savings easier to build.

   

• Personal contributions may get tax deductions. Limits apply to how much can be claimed.

   

• Adjusting contributions helps save for retirement. Smart contributions give tax and growth benefits.

   

• Knowing the 2025-26 Tax Rates helps plan taxes. Early planning makes the most of tax breaks.
  

Goods and Services Tax (GST)

• GST is 10% on most goods and services. Both buyers and sellers must pay GST each time.

   

• Businesses must include GST in pricing and reports. Correct reporting of GST helps avoid fines and problems.

   

• Small businesses can use simple GST methods for ease. Simple methods reduce paperwork and compliance for small firms.

   

• Knowing GST rules helps prevent mistakes and audits. Planning GST properly improves cash flow and finances.

Tax Planning Strategies for Individuals

You can lower taxes using easy steps:

• Claim deductions and rebates you can get.

   

• Use tax offsets in the right way.

   

• Add money to the super to cut taxable income.

   

• Plan gains and losses on assets well.

   

These steps match the 2025-26 tax rates in Australia. Planning ahead can cut your tax bill.

Tax Planning Strategies for Businesses

Businesses can lower taxes using simple methods:

• Set up companies to pay less tax.

   

• Claim all business costs as deductions.

   

• Plan asset wear and capital use.

   

• Use industry incentives smartly.

   

These steps can cut the total tax. Careful planning helps growth and keeps you legal.

Impact of Tax Changes on Investments

Know Taxes on Investment Income

Investment income may face a new tax under current rules. Knowing rates helps you plan when to invest smartly.

Taxes Differ for Dividends, Interest, and Gains

Dividends, interest, and gains are taxed in different ways. Knowing this helps you avoid tax surprises with money.

Plan Your Portfolio with Tax Rules

Use tax rules to plan a strong fund portfolio. Spread money wisely to earn better returns from investments.

Use Tax-Smart Investments to Save

Smart investments can cut taxes and boost your returns. Making tax-wise choices keeps more money in your pocket.

Check After-Tax Returns Before Investing

Look at after-tax returns to make clear choices. Compare all options to pick the best investment plan.

Time Investments to Reduce Taxes

When to buy or sell can cut your total tax. Good timing can lower taxes and increase your net gain.

Keep Up with Tax Law Changes

Track updates to tax laws to stay safe and clear. Being informed keeps your investment plan strong and sound.

Non-Resident Tax Rates

• Non-residents may pay higher tax on Australian income. Knowing this avoids surprise deductions.

   

• Dividends, interest, and royalties may be taxed differently. This helps plan how and when to withdraw money.

   

• Tax treaties may lower tax liability. Treaties stop double taxation on cross-border income.

   

• Following reporting rules avoids fines. Filing forms correctly keeps you legal and safe.

   

• Staying informed helps plan finances better. It reduces risk and improves cash flow.

   

Fringe Benefits Tax (FBT)

• Fringe benefits may have a separate tax. It is added on top of normal income tax.

   

• FBT rate is about 47% of the value. High-value benefits can raise company costs.

   

• Good planning can cut costs and help staff. Smart benefits save money for both sides.

   

• FBT compliance meets legal rules. Breaking rules can lead to fines from the ATO.

   

• Knowing FBT helps manage company spending. It allows better budgeting and cost control.

   

Payroll Tax Considerations

• Payroll tax applies if the company’s wages pass a threshold. Small firms may not pay; big firms must plan.

   

• Rates differ by state and territory. Each state has rules, so know local laws.

   

• Salary planning can lower payroll tax. Changing salary parts can save on tax.

   

• Keep up with 2025–26 tax rates. Rate changes affect budgeting and cash flow.

   

• Planning prevents fines and errors. Paying on time avoids penalties.

   

State Taxes and Levies

• States may charge stamp duty, land tax, or levies. These add cost to property and business deals.

   

• Include state taxes in planning. This keeps forecasts accurate.

   

• Combine federal and state taxes for budgeting. It prevents cash flow problems.

   

• Awareness lowers the risk of surprise bills. Knowing deadlines helps manage money well.

   

• State tax planning keeps operations smooth. It also avoids disputes with authorities.

   

Tips for Compliance

• Keep good records of all transactions. It makes audits and reporting easier.

   

• Check records often to avoid mistakes. Regular checks catch errors early.

   

• Get professional advice for tricky taxes. Experts can find savings you might miss.

   

• Use software to track money and spending. Automation reduces human error.

   

• Following these tips improves accuracy. It also builds confidence in long-term planning.

Tax Implications for Freelancers and Gig Workers

Freelancers and gig workers may have different tax rules in 2025-26. Knowing these rules can help plan money and avoid surprises.

Income Sources

• Freelancers earn from many projects.

   

• Money may come from fees, tips, or online work.

   

• All income should be reported to avoid trouble.

   

Record Keeping

• Keep receipts and bills for all work costs.

   

• Track all work expenses to lower taxable income.

   

• Good records make filing taxes easier.

   

Claimable Expenses

• Work tools and gear may be claimed.

   

• Travel for work may lower taxes.

   

• Home office costs may count if used often.

   

Planning Tips

• Plan ahead to avoid end-of-year surprises.

   

• Knowing tax rules keeps the money flow smooth.

   

• Early prep can reduce stress and fines.

   

Technology and Digital Tax Tools

Technology can make taxes easier and reduce mistakes in 2025-26.

Accounting Software

• Tracks income, costs, and GST automatically.

   

• Helps keep correct records for claims.

   

Smart Tax Apps

• Show deductions you may forget.

   

• Help calculate super and payroll taxes quickly.

   

Cloud-Based Systems

• Keep data safe and cut errors.

   

• Make tax filing faster and simpler.

   

• Help people and firms follow the 2025-26 rules.

   

Early Adoption Benefits

• Using tools early makes tax compliance smooth.

   

• Cuts the risk of mistakes or missed dates.

   

• Helps plan money through the year.

The 2025-26 Tax Rates in Australia affect both people and firms. Knowing tax brackets, deductions, and incentives helps plan money. Individuals can lower taxes using super or smart investments. Businesses can plan growth and pay taxes efficiently.

Meru Accounting offers expert help to handle these tax changes. We help people and firms plan taxes well. Our team uses tools to track income and costs accurately. With Meru Accounting, you can grow your business while we manage taxes. Expert advice ensures you use all incentives and file correctly.

FAQs 

1. What are the individual tax rates in Australia for 2025-26?
   Individual tax rates in Australia 2025-26 range from 0% to 45%. Knowing brackets helps plan finances efficiently.
2. How are small businesses taxed under the 2025-26 tax rates?
   Small businesses may face a 25–27% tax on profits. Proper planning can reduce liability.
3. What is the Medicare levy rate for 2025-26?
   The Medicare levy remains 2–2.5%. High-income earners may contribute slightly more.
4. Are there new business tax incentives in Australia 2025-26?
   Yes, some sectors may get reduced rates or incentives. These encourage growth and investment.
5. How can super contributions reduce taxes under 2025-26 rates?
   Super contributions lower taxable income within limits. Both personal and employer contributions qualify.
6. What is the GST rate in Australia for 2025-26?
   GST remains 10%. Businesses must include GST in pricing and reporting.
7. How are non-residents taxed under the 2025-26 Australian rates?
   Non-residents face higher withholding on dividends, interest, and royalties. Tax treaties may reduce liabilities.
8. What is the fringe benefits tax (FBT) rate in 2025-26?
   FBT remains 47% on taxable benefits. Proper planning helps reduce overall company tax.
9. Can deductions reduce tax liability under the 2025-26 rates?
   Yes, eligible deductions lower taxable income. Documentation ensures claims are accepted by the ATO.
10. How are dividends from Australian companies taxed under 2025-26 rates?
    Dividends are taxed based on franking and residency. Proper planning helps pay the correct tax.

11. How do 2025-26 rates affect capital gains tax?
    Capital gains are included in taxable income. Planning sale timing reduces payable tax.
12. How are non-residents taxed on Australian-sourced income in 2025-26?
    Non-residents face higher withholding rates. Tax treaties may reduce liabilities in some cases.
13. How are middle-income earners taxed under 2025-26 rates?
    Income between 50,001 and 120,000 AUD faces a 20–30% tax. Deductions can lower liability.
14. How are Australian-sourced interest incomes taxed in 2025-26?
    Interest is included in taxable income. Rates follow individual income brackets.
15. Are foreign dividends taxed under the 2025-26 Australian tax rates?
    Yes, foreign dividends are taxed, but foreign tax credits may apply to avoid double taxation.