Global Daily Tax News, Personal Tax Reliefs Announced In New Australian Budget, (May 14, 2026)

Alongside the announcement of a new minimum tax on discretionary trusts and an overhaul to the nation's capital gains tax rules, the Australian Government announced plans for a new Working Australians Tax Offset (WATO) and a new AUD1,000 instant tax deduction for work-related expenses, in its newly released Budget.

The so-called WATO will be offered to Australian workers for income earned from July 1, 2027, providing a permanent annual tax offset of up to AUD250. This will increase the effective tax-free threshold for workers by nearly AUD1,800 to AUD19,985 (or up to AUD24,985 for workers eligible for the Low Income Tax Offset), the Government said.

The WATO will be available automatically after workers lodge their tax return and will be available also to sole traders.

Meanwhile, Australia will introduce a AUD1,000 "instant tax deduction" for work-related expenses to offset employment income from the 2026-27 income year. The relief will enable employees to reduce their taxable income by up to AUD1,000 without keeping receipts when they lodge their tax return.

The existing rules for claims over AUD1,000 will remain, and charitable donations, union and professional association membership fees, and other non-work related deductions may still be claimed on top of the instant tax deduction.

The Government said: "An Australian worker on average earnings would receive a combined benefit of AUD2,496 from the 2027-28 income year from the WATO and three rounds of tax cuts relative to 2023-24, as well as up to AUD320 from the instant tax deduction, for a total benefit of up to AUD2,816."

Finally, the Government has also announced an increase to the Medicare levy low-income thresholds of 2.9 percent for singles, families, and seniors and pensioners from July 1, 2025.