Evidence-backed. Sourced from the ATO, eTax, H&R Block, CPA Australia, ABC News, Deloitte and MySuperTax. General information only — not financial or tax advice. Your tax situation depends on your specific income, deductions and circumstances. Consult a registered tax agent. Last updated: June 2026.
⚡ Key Takeaways
- The 2025–26 income year is the second year under the revised Stage 3 tax cuts. Your marginal rate on income between $18,201 and $45,000 is now 16% (was 19%), and between $45,001 and $135,000 it’s 30% (was 32.5%). Most workers will pay less tax than they did three years ago — but also receive a smaller refund, because less was withheld during the year. [1][2]
- From 1 July 2026, another tax cut arrives: the lowest rate drops from 16% to 15%, worth an extra $268/year for anyone earning $45,000+. From 1 July 2027, it drops again to 14% (another $268). These cuts are already legislated. [3][1]
- From 1 January 2025, the foreign resident CGT withholding rate rose to 15% and the property value threshold was removed entirely. More property transactions involving foreign residency are now caught — and errors in residency classification can result in significant unexpected tax bills. [4]
- The ATO now has power to hold refunds for up to 90 days where it has integrity concerns about a return (under the Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024). If your return has data mismatches or high-risk deduction patterns, your refund may be delayed while the ATO reviews it. [4][7]
- The Tax Help income limit (free ATO assistance for simple returns) rose from $60,000 to $70,000 — more Australians can now access free lodgement assistance. [4]
- The standard lodgement deadline is 31 October 2026 for individuals lodging without a tax agent. myTax pre-fill data is typically complete by late July or early August — this is the right time to log in and start your return. [5][6]
Tax Season 2026 Is Open: The Biggest Changes to Your Australian Tax Return
By The Fine Print editorial team | Last updated: June 2026 | 10 min read | ⚠️ Not financial advice
Tax season 2026 opened on 1 July. If you haven’t lodged yet, this guide covers everything that’s changed for the 2025–26 income year — new tax rates, the ATO’s new refund-hold powers, tougher rules on foreign property transactions, and why your refund may be smaller than expected. Understanding what’s different this year is the difference between a smooth lodgement and an unexpected bill.📋 What’s in This Guide
The 2025-26 Tax Rates — and What’s Coming Next
The revised Stage 3 tax cuts that took effect from 1 July 2024 restructured the personal income tax brackets. For 2025–26 (the current income year), these are the rates applying to Australian residents: [1][2]- $0 – $18,200: 0% (tax-free threshold — unchanged)
- $18,201 – $45,000: 16% (was 19% before 1 July 2024)
- $45,001 – $135,000: 30% (was 32.5% up to $120,000)
- $135,001 – $190,000: 37%
- $190,001+: 45%
- Plus 2% Medicare Levy applies to most taxpayers (with low-income and other exemptions)
Key Rule Changes Affecting 2025-26 Returns
Foreign resident CGT withholding — tougher from 1 January 2025
From 1 January 2025, the foreign resident capital gains withholding regime changed significantly. The withholding rate rose from 12.5% to 15%, and the previous $750,000 property value threshold was removed entirely — meaning all Australian real property transactions involving a foreign resident vendor are now subject to withholding, regardless of the sale price. Australian residents selling property through complex arrangements or while temporarily overseas can face withholding issues if their residency status is unclear. If you’re unsure whether the foreign resident rules apply to your situation, get specific advice before settlement. [4]ATO refund-hold powers — up to 90 days
Under the Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024, the ATO can now retain refunds and credits for up to 90 days where it has integrity concerns about a return. This was previously possible but is now explicitly legislated and operationalised as part of the ATO’s expanded verification process. If your return includes data mismatches (your income doesn’t line up with pre-filled data) or unusually high deduction claims, your refund may be delayed while the ATO reviews it. [4][7]Tax Help income limit rises to $70,000
The ATO’s Tax Help program — which provides free assistance to people with simple tax affairs — now covers individuals with income up to $70,000, up from $60,000. If you earn under this threshold and have a simple return (no rental properties, business income or complex investments), Tax Help volunteers can lodge for free. Check the ATO website for session availability near you. [4]Expanded myTax pre-fill and digital tools
myTax in 2026 includes expanded pre-fill for bank interest, dividends, managed funds, private health insurance and some government payments. Real-time refund tracking is now available after lodgement. The ATO’s integrated deduction calculators help verify that claimed amounts are within typical ranges. The practical effect: the ATO knows more about your finances than ever before your return is even lodged — which means mismatches between your return and pre-filled data are identified faster and more systematically. [6][7]Why Your Refund May Be Smaller (and Why That’s Normal)
One of the most common points of confusion in 2024–25 and 2025–26 is a smaller tax refund — or even a small amount payable — compared to previous years. This is an expected consequence of the Stage 3 tax cuts. [2][6]💡 How it works: When tax rates fall, your employer withholds less PAYG during the year — matching the lower tax you actually owe. At tax time, there’s less overpayment to refund. A smaller refund doesn’t mean the ATO has taken more from you; it means less was taken in the first place. Your overall tax bill for the year is lower. Expecting a large refund when your rates have dropped is like expecting a large change from a cheaper purchase. [2][6]
The exception: if your withholding was set based on old tax rates and your employer hasn’t updated the calculation, you may receive a refund even under the new rates. But ATO systems and payroll software are generally updated at the start of each financial year. CPA Australia and tax practitioners note that people who copy last year’s return without adjusting for changed circumstances — or who rely on inflated deductions to generate a refund — are now at higher risk of scrutiny under the ATO’s expanded data-matching. [12][9]The ATO’s 90-Day Refund Hold — Who Gets Affected
The 90-day refund hold is a new tool for the ATO but not a random one — it’s risk-targeted. The ATO uses algorithmic risk assessment to identify returns with characteristics associated with fraud or error: income that doesn’t match pre-filled data, deductions that are unusually high relative to income, or patterns common to identity theft or fraudulent lodgements. [4][7]⚠️ Who is most at risk of a refund delay: returns with claimed deductions significantly higher than the pre-filled amount; returns where income doesn’t match pre-filled salary, interest or dividend data; returns lodged very early in July before pre-fill is complete; and returns with patterns associated with “refund maximisation” tactics promoted on social media. The best way to avoid a hold is to lodge accurately, wait for pre-fill to be complete, and only claim deductions you can document. [4][7][10]
How to Lodge Smarter in 2026
The ATO’s myTax and Online Services platform has improved significantly. For most individuals with employment income, some deductions and perhaps some investment income, self-lodgement via myTax is straightforward. Here’s the optimal process: [6][7][5]- Wait for pre-fill to be complete — typically late July or early August. Lodging in the first week of July risks an incomplete picture and increases the chance of mismatches.
- Log into myGov → ATO → Tax → Manage → Lodge a tax return and check all pre-filled data against your own records (payslips, bank statements, super annual statement, health insurance certificate).
- Add only what you can prove — deductions you have receipts, invoices or logs for. The ATO’s systems flag claims that look implausible given your employment type and income level.
- Don’t copy last year’s return without reviewing what’s changed — your income, circumstances, deductions and the tax rules themselves may all be different.
- Lodge by 31 October 2026 if self-lodging. If using a tax agent, they operate under an extended lodgement program — check their schedule.
✅ Three Actions Before You Lodge
Action 1: Read the ATO’s “What’s new for individuals” page first
Before you open myTax, go to ato.gov.au → Individuals → Your tax return → Before you prepare your tax return → What’s new for individuals. This page lists every change that affects individual returns for the current year — new offsets, changed rules, updated thresholds, and any new reporting requirements. For 2025–26 the key items include the foreign resident CGT changes (from 1 January 2025), the refund-hold powers, and the Tax Help income limit increase. Spending 10 minutes here prevents errors from applying old rules to a new year. [4][13]Action 2: Calculate your expected outcome before lodging and adjust your expectations
Use a reputable tax calculator — the ATO’s own tools, eTax, H&R Block, or MySuperTax — to estimate your 2025–26 taxable income, tax liability and likely refund or payable. Plug in your gross income, the withholding shown on your income statement, and any deductions you plan to claim. Knowing your approximate outcome before lodging prevents the surprise of a smaller-than-expected refund. If you want to adjust withholding for next year (2026–27), you can complete a withholding variation form (NAT 5024) and submit it to your employer. [7][2][1]Action 3: Let pre-fill lead, then add only what you can prove
Once pre-fill is loaded (late July or August), review every pre-filled item: income statements, bank interest, dividends, managed fund distributions, private health, government payments. Correct anything that’s wrong — mismatches in your favour (income understated) need to be fixed, not left in place hoping the ATO won’t notice. Then add your deductions: only include claims backed by receipts, invoices, logbooks or time records you actually have. The ATO’s ABC coverage confirms a sharp focus in 2026 on inflated work-related deductions and “instant tax hack” claims from social media — these are exactly the categories that trigger both automated flags and manual review. If your deduction is legitimate and documented, claim it confidently. If you’re relying on a rough estimate or a tip from TikTok, don’t. [6][7][10][11]❓ Frequently Asked Questions
What are the income tax rates for 2025-26?
$0–$18,200: 0%; $18,201–$45,000: 16%; $45,001–$135,000: 30%; $135,001–$190,000: 37%; $190,001+: 45%. Plus 2% Medicare Levy. These reflect the Stage 3 tax cuts from 1 July 2024 and are unchanged from 2024-25. From 1 July 2026, the lowest rate steps to 15%. [1][2]Why is my refund smaller this year?
Lower tax rates mean less PAYG withheld during the year — so less overpayment, less refund. Your total tax bill is lower; the refund is just smaller because you paid closer to the right amount throughout the year. [2][6]When is the 2025-26 tax return deadline?
31 October 2026 for self-lodgers. If using a registered tax agent, their extended lodgement program applies — check with your agent. Late lodgement without a valid reason triggers a failure-to-lodge penalty. [5]What is the ATO’s 90-day refund hold?
A legislated power (2024) to delay refunds up to 90 days where there are integrity concerns — mismatched data or high-risk deduction patterns. Lodge accurately, confirm pre-fill, document deductions and you’re at low risk of a hold. [4][7]⚖️ The Fine Print Verdict
Tax season 2026 is not dramatically different from last year — but there are enough moving parts to catch people off guard. Smaller refunds from lower withholding. Tighter CGT rules for property involving foreign residency. New ATO powers to hold up your refund if your return looks suspicious. And a data-matching environment where mismatches between your return and third-party data are caught faster than ever. None of this makes honest, well-documented returns harder. It makes lazy, estimated, or socially-media-optimised ones riskier. Read the ATO’s “What’s new” page. Wait for pre-fill. Claim only what you can prove. Lodge before 31 October. That’s the entire playbook.
👉 Read the ATO’s “What’s new.” Wait for pre-fill. Claim what you can prove. Lodge by 31 October.
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Plain-English breakdowns of Australian money news every week — no jargon, no spam.📚 Sources & References
- ATO, “Personal income tax: new tax cuts for every Australian taxpayer,” ato.gov.au/about-ato/new-legislation/in-detail/individuals/personal-income-tax-new-tax-cuts-for-every-australian-taxpayer
- eTax, “Stage 3 tax cuts explained,” etax.com.au/stage-3-tax-cuts-explained/
- H&R Block, “Income tax cuts 2027 and 2028,” hrblock.com.au/tax-academy/income-tax-cuts-2027-and-2028
- ATO, “What’s new for individuals,” ato.gov.au/individuals-and-families/your-tax-return/before-you-prepare-your-tax-return/what-s-new-for-individuals
- ATO, “Registered agent lodgment program 2025-26 — due dates by month,” ato.gov.au/tax-and-super-professionals/for-tax-professionals/prepare-and-lodge/registered-agent-lodgment-program-2025-26
- Cockatoo, “Australian taxes — what’s changed,” cockatoo.com.au/blog/australian-taxes-whats-changed
- MySuperTax, “Individual tax guide Australia 2026,” mysupertax.com.au/blog/individual-tax-guide-australia-2026/
- Deloitte Australia, “Tax insights,” deloitte.com/au/en/services/tax/analysis/tax-insights1.html
- PwC Australia, “TaxTalk monthly update April 2026,” pwc.com.au/tax/taxtalk
- ABC News, “Tax time 2026: ATO warns millions of Aussies on deduction claims,” abc.net.au/news/2026-06-02/tax-time-2026-ato-warns-millions-of-aussies-claim-tax-deductions/106732166
- YouTube/ATO content, “Tax time 2026 guidance,” youtube.com/watch?v=I_D7i0EKnrc
- CPA Australia, “Tax news 5 February 2026,” cpaaustralia.com.au/taxnews/5-february-2026
- ATO, “Forms and instructions,” ato.gov.au/forms-and-instructions
- Tax Institute, “Federal Budget 2026-27 — it’s time to take action on tax reform,” taxinstitute.com.au/insights/media/2026/federal-budget-2026-27
- PABS Accounting, “Lodge tax return Australia 2026 — step-by-step guide,” pabsaccounting.com.au/knowledge-center/blog/lodge-tax-return-australia-2026-step-by-step-guide
This article is general information only and does not constitute financial or tax advice. Tax obligations depend on your specific income, deductions and circumstances. Consult a registered tax agent for advice tailored to your situation. The Fine Print 🇦🇺 is not affiliated with the ATO or any tax agent mentioned.