What changes to Australian payroll take effect on 1 July 2026?

From 1 July 2026, the national minimum wage rises to $26.44 per hour ($1,004.90 per week), the life and death benefit ETP caps increase to $270,000, the genuine redundancy tax-free limit increases to $13,598 plus $6,801 per completed year of service, the cents per kilometre rate rises to 91 cents, and the lowest income tax rate drops from 16% to 15%. The super guarantee rate stays at 12%.

Is the super guarantee rate changing in 2026–27?

No. The super guarantee rate stays at 12%, as the final scheduled increase took effect on 1 July 2025. There is no need to update the rate on your super pay elements. The maximum contribution base for 2026–27 is set at $270,830, with a maximum SG contribution of $32,499.60 per employee per year.

What is a 53-week or 27-fortnight pay year?

Occasionally a financial year contains an extra pay cycle – 53 weeks instead of 52, or 27 fortnights instead of 26. Because ATO tax tables assume a standard 52-week or 26-fortnight year, an extra pay can mean insufficient tax is withheld. Employees can request an upward variation to withhold additional tax each period; otherwise the standard calculation applies.

Australian tax year-end update: 2026–27 payroll, tax and super changes

Q: What do I need to do if I self-manage my payroll (SaaS)?

Affinity applies the updated tax tables, the new ETP caps and the genuine redundancy tax-free limit automatically. Two items need your attention: checking employee pay rates against the new minimum wage, and updating your mileage pay codes for the new 91 cents per kilometre rate.

Every Australian financial year starts the same way: a fresh set of tax tables, new thresholds, an updated minimum wage, and shifting super rules. For anyone running payroll, it means reading the legislation, working out what actually changed, and making sure every figure is right before the first pay run of July. It is detailed, time-sensitive work, and the cost of getting it wrong lands on employees' pay.

This article sets out the confirmed Australian payroll, tax and superannuation changes taking effect from 1 July 2026, explains what each one means, and shows which are applied automatically and which call for a quick check. Most are handled for you. The few that need attention are flagged clearly, with separate guidance for self-managed and fully managed payrolls.

Payday Super also starts on 1 July 2026. We are communicating about that separately, so this article only references it where relevant. For background, see our Payday Super July 2026 update.

What Affinity does for you

The 2026–27 changes break down into three groups: the ones we apply automatically, the couple that need a quick check if you self-manage your payroll, and everything that is handled for you if your payroll is fully managed.

If you self-manage your payroll (SaaS)

We apply the updated tax tables, the new ETP caps, and the genuine redundancy tax-free limit automatically. Two items need your attention: checking employee pay rates against the new minimum wage, and updating your mileage pay codes for the new cents per kilometre rate.

If your payroll is fully managed (FMS)

We apply all of the above for you, including updating your mileage pay codes. Your Affinity Payroll Manager will also review any pay rates affected by the minimum wage increase with you, and is your first point of contact for any questions about these changes.

National minimum wage

The Fair Work Commission has confirmed a 4.75% increase to modern award minimum wages and a 5.97% increase to the national minimum wage. From 1 July 2026, the national minimum wage will be $26.44 per hour, or $1,004.90 per week. The increase applies from the first full pay period starting on or after 1 July 2026.

SaaS

Check your employees' pay rates against the new minimum and make any changes required.

FMS

Your Payroll Manager will help you identify any employees affected and make the pay rate changes needed.

ETP caps

There are several caps (limits) that can apply to ETPs, depending on how they are classified. From 1 July 2026, the life benefit and death benefit termination payment ETP caps both increase to $270,000. The whole-of-income cap is unchanged at $180,000, because it is a non-indexed figure.

All customers

Affinity applies the new ETP caps automatically. There is nothing you need to do.

Genuine redundancy and early retirement scheme tax-free limit

From 1 July 2026, the tax-free limit for genuine redundancy and early retirement scheme payments increases to $13,598 plus $6,801 for each completed year of service. These amounts are generally reported as Lump Sum D where applicable.

All customers

Affinity applies the new tax-free limit automatically. There is nothing you need to do.

Cents per kilometre rate

The ATO has confirmed a rate of 91 cents per kilometre for the 2026/27 tax year, effective 1 July 2026 to 30 June 2027, up from 88 cents.

SaaS

Update your mileage pay codes to the new rate as appropriate.

FMS

We update your mileage pay codes for you.

Income tax changes

From 1 July 2026, the 16% tax rate is reduced to 15%. This rate applies to taxable income between $18,201 and $45,000. The tax-free threshold stays at $18,200 and all other tax brackets stay the same.

Study and training support loan tables are also updated for 2026–27, reflecting the marginal repayment system and indexed repayment thresholds.

All customers

Affinity applies the updated income tax and study and training support loan tables automatically. The change takes effect from the first pay run with a pay date on or after 1 July 2026.

FBT rates and thresholds

For the FBT year running from 1 April 2026 to 31 March 2027:

The FBT rate remains at 47%.
The Type 1 benefit gross-up rate remains at 2.0802 and the Type 2 benefit gross-up rate remains at 1.8868.
The threshold for reporting fringe benefits on employee income statements remains at a taxable value of $2,000 and a grossed-up value of $3,773.
There is no change to these rates and no action needed.

FBT earnings

If you report fringe benefits through payroll, the following applies when recording FBT amounts for the year:

FBT amounts must be expressed as a ‘grossed-up’ taxable value for Single Touch Payroll (STP).
Processing can occur any time after the end of the FBT year, but must be completed before 1 July 2026. Any amendments or additions to FBT amounts after this date would require a manual end-of-year cleardown, which may result in delays.

SaaS

All FBT pay elements should be configured as informational codes in Affinity.
Pay elements used for internal reporting should be categorised as either ‘Reportable Fringe Benefit – Taxable’ or ‘Reportable Fringe Benefit – Exempt’ in the STP P2 Category lookup within the pay elements masterfile.
FBT amounts should be processed as a Type 7 pay adjustment for each employee.

FMS

Provide your FBT amounts to your Payroll Manager before 1 July 2026 so they can be processed in line with the requirements above.

Superannuation

The super guarantee (SG) rate stays at 12%, as the final scheduled increase took effect on 1 July 2025. There is no rate change this year, so there is no need to update the rate on your super pay elements.

From 1 July 2026, the maximum contribution base is set annually, at $270,830, with a maximum SG contribution of $32,499.60 per employee per year. Setup relating to the maximum contribution base and qualifying earnings is covered in our separate Payday Super communications.

The annual contribution caps also increase. The concessional cap rises to $32,500, the non-concessional cap to $130,000, and the bring-forward maximum to $390,000. The general transfer balance cap rises to $2.1 million. These caps mainly affect employees who make voluntary contributions.

Calculating extra tax payments

SaaS

If you self-manage your payroll, a reminder that only the following Affinity Payroll Admin pay elements should be used to calculate extra tax payments for employees:

TAX, ADDTAX, CTAX, EXTAX, LTAX, PTAX, TAXP, TTAX, XPTAX, XTAX, XTAX%

These pay elements are correctly configured and are automatically included in reported tax amounts. If you use other pay elements to calculate extra tax, they will not be included in reported tax amounts.

Planning for a 53-week or 27-fortnight pay year

Every now and then a financial year contains an extra pay cycle, giving 53 weeks instead of 52, or 27 fortnights instead of 26. This happens because a year does not contain precisely 52 weeks, and because of when pay day and the start and end of the financial year fall.

If you have weekly or fortnightly pay runs, an extra pay can mean insufficient tax is withheld from employees, because ATO tax tables use a standard 52-week and 26-fortnight calculation. Now is a good time to think about how many pay runs you will have in the coming year. You can choose to let employees know when a year has an extra pay run. If an employee asks to have additional tax withheld each period (an upward variation), you can set that up. It is up to the employee to make the request, otherwise the standard calculation is used.

FMS

Your Payroll Manager can help you work out whether the coming year has an extra pay run and what it means for your employees.

End of financial year reporting

Following your final pay of the year, Affinity submits a final Single Touch Payroll (STP) event for all customers. This finalises your employees' income statements with the ATO. End of financial year summaries will be available to your employees in their ATO portal by 14 July 2026 at the latest.

All customers

Affinity submits the final STP event for you. There is nothing you need to do.

Questions

If your payroll is fully managed, speak with your Affinity Payroll Manager. If you self-manage your payroll and need a hand, contact our support team.

This article provides general information about Australian payroll, tax and superannuation changes for the 2026–27 financial year. It is not professional tax or legal advice. Rates and thresholds are subject to confirmation by the ATO, the Fair Work Commission and other relevant authorities. Always verify current figures before processing payroll.

Running payroll in Australia?

Affinity Payroll applies the new tax tables, ETP caps, redundancy limits and super thresholds automatically, and submits your final STP event at year-end. Get in touch to learn how we support Australian payroll teams.

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