New Tax Cuts from July 2026: What They Mean for Your Novated Lease
14 million Australians get another income tax cut from 1 July 2026. Here's what that means for novated leasing and your salary packaging strategy.
From 1 July 2026, over 14 million Australian taxpayers will receive another income tax cut — up to $268 per person — according to the Treasury Ministers announcement [Source 1]. It's part of a longer-term plan to reduce the average worker's income tax by up to $2,816 a year by 2027–28.
That's real money back in pockets. But here's something worth thinking about: a lower marginal tax rate affects how the pre-tax savings in a novated lease work — and not always in the way you'd expect.
What this means for novated lease customers
Novated leasing saves you money because your car costs are paid from your pre-tax salary, reducing the income you're taxed on. The higher your marginal rate, the bigger that saving. So when income tax rates fall, the raw tax benefit of salary packaging narrows — slightly.
But that's only half the picture. For EVs that qualify under the FBT exemption, the novated lease advantage doesn't rely on your marginal rate in the same way — the fringe benefits tax is simply not applied to eligible zero-emission vehicles. That structural benefit remains intact regardless of these rate cuts.
For everyone else, a novated lease still stacks up well. Even with marginally lower tax rates, you're combining pre-tax savings on the car, running costs, and GST savings that a standard car loan or cash purchase can't replicate. The question isn't whether a novated lease still saves you money — it's how much, and that depends on your specific income and vehicle choice. This is exactly why an independent, no-BS comparison matters more than a headline.
Common questions
Does the July 2026 tax cut reduce the benefit of my novated lease?
Marginally, for some income brackets. Lower tax rates mean a slightly smaller pre-tax saving on salary-packaged costs. However, the overall package of benefits — GST savings, bundled running costs, and the FBT exemption on eligible EVs — means a novated lease typically still compares favourably to other financing options.
Does the FBT exemption on EVs still apply after these tax changes?
Yes. The FBT exemption for eligible zero-emission vehicles is a separate policy to income tax rates. The July 2026 income tax cuts do not affect that exemption. Always confirm your specific vehicle qualifies under current ATO guidelines.
Should I set up my novated lease before or after 1 July 2026?
There's no definitive universal answer — it depends on your income, the vehicle, and your employer's payroll cycle. Speak to a licensed novated lease adviser to run the numbers for your situation before making a decision.
Who benefits most from the July 2026 tax cut?
According to the Treasury Ministers release [Source 1], younger Australians make up the largest share of beneficiaries, with the cut worth up to $268 per taxpayer this financial year.
Is millarX independent? Who do they work with?
millarX is an ACL-licensed (ACL 569484), AFCA-registered novated lease broker — not a lender or manufacturer. We work with multiple funders and always hold customer funds in segregated accounts.