Treasurer Jim Chalmers has opened public consultation on draft legislation for a $1,000 instant tax deduction, with around 6.2 million workers expected to benefit from the proposed changes.
The measure would allow eligible workers to reduce their taxable income by $1,000 without providing receipts when lodging their 2026–27 tax return, a move the government says will simplify the tax process and ease cost-of-living pressures.
The Treasurer said the reform is aimed at “making the tax system simpler and delivering more lasting cost-of-living relief to taxpayers.”
Under the proposal, 42 per cent of taxpayers are expected to benefit in the 2026–27 financial year, with an average tax saving of $205.
Government figures show around 3.3 million of those benefiting, or 54 per cent, are women, with an average benefit of $200. About 4.5 million people with taxable incomes below $100,000 are expected to receive an average benefit of $195. Younger workers are also a key group, with around 1.7 million taxpayers under the age of 30 set to benefit by an average of $200.
The Treasurer said the changes would “help workers cut back on the paperwork and save them time and money at tax time.”
Taxpayers who claim more than $1,000 in work-related deductions will still be able to do so under existing rules. Other claims, including charitable donations and professional memberships, will remain unaffected and can be added on top of the instant deduction.
The proposal forms part of the Albanese Government’s broader cost-of-living measures, which include a temporary fuel tax cut, further rounds of tax reductions, lower costs for medicines and childcare, student debt relief, and wage increases.
The Treasurer said the government is “delivering a fairer, simpler and more sustainable tax system that will help Australian workers earn more and keep more of what they earn, and implementing a $1,000 instant tax deduction is a big part of that reform agenda.”
If passed, the measure will take effect from the 2026–27 income year, with workers seeing the benefit when lodging their tax returns in the second half of 2027.
Public consultation on the draft legislation is open until 30 April 2026.
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