The Government has announced the $250 Working Australian Tax Offset (WATO) as a measure to reduce the tax burden on individual taxpayers in the face of cost-of-living pressures.
On lodgement of their 2028 income tax returns, individuals who earn employment income and business income as sole traders will qualify for the $250 WATO. The WATO effectively increases the tax-free threshold for an individual to approximately $19,985 (and up to $24,985 when combined with the Low Income Tax Offset).
The WATO forms part of the Government’s broader package, which also includes two further rounds of tax cuts and its election commitment to introduce a $1,000 standard deduction for work-related expenses for the 2027 income tax year.
The tax rates and income thresholds for Australian tax residents are as follows:
| Taxable income ($) | 2025-26 | 2026-27 | 2027-28 |
| 0 – 18,200 | 0% | 0% | 0% |
| 18,201 – 45,000 | 16% | 15% | 14% |
| 45,001 – 135,000 | 30% | 30% | 30% |
| 135,001 – 190,000 | 37% | 37% | 37% |
| 190,001+ | 45% | 45% | 45% |
Increase to Medicare Levy Low-Income Thresholds
As a related measure, the Government will also increase the Medicare levy low-income thresholds by 2.9% from 1 July 2025, ensuring that more than one million lower-income Australians remain exempt or continue to pay a reduced levy.
