The July 2026 Tax Cut Is Coming — Here's What It Means for Your Novated Lease

From 1 July 2026, the Albanese Government is delivering another income tax cut — up to $268 for every Australian taxpayer, according to the Treasury Ministers announcement. Over 14 million Australians are in scope, and the government says this is a step toward reducing the average worker's income tax by up to $2,816 a year by 2027–28.

That sounds unambiguously good. And for most PAYG employees it is. But if you have a novated lease — or you're thinking about getting one — there's a wrinkle worth understanding before you assume the maths hasn't changed.

What this means for novated lease customers

Novated leasing works by reducing your pre-tax salary, which lowers the income tax you pay. The bigger the gap between your gross income and your marginal tax rate, the more a novated lease can save you.

When the government cuts income tax rates, that gap shifts slightly. For employees sitting near a tax bracket threshold, a rate reduction can nudge the effective benefit of pre-tax salary packaging. This doesn't make novated leasing less worthwhile — for most people it remains one of the most accessible tax-advantaged tools available to PAYG workers — but it does mean your existing quote may be based on slightly different tax assumptions than what applies from 1 July.

If your novated lease starts, renews, or is up for review around this date, it's worth asking your provider to rerun the numbers using the updated tax schedule. Electric vehicles remain exempt from FBT under current rules, which is a separate and substantial advantage that this tax cut doesn't affect either way. The combination of the EV FBT exemption and salary packaging still represents a meaningful potential saving — we just won't put a specific dollar figure on it here because your individual result depends on income, vehicle, and km travelled.

Common questions