Albanese Tax Reforms 2026: What PAYG Workers Should Know
The government is one step closer to cutting taxes for 13 million workers. Here's what the 2026 tax reforms mean if you hold or plan a novated lease.
The Albanese Government announced on 23 June 2026 that the Greens will support the first tranche of its tax reform legislation — bringing cuts for workers, first home buyers, and small businesses closer to reality. According to the Treasury Ministers release [[Source 1]](https://ministers.treasury.gov.au/ministers/Jim-Chalmers-2022/media-releases/Government-another-step-closer-to-delivering-tax-reforms), the reforms aim to cut taxes for over 13 million workers and better align the tax treatment of labour and asset income.
The legislation still needs to clear the Senate, and three parties voted against it in the House. So it's not law yet — but the numbers look closer than they have in some time.
What this means for novated lease customers
A novated lease works by redirecting a portion of your pre-tax salary to cover vehicle costs, which reduces your taxable income. If your marginal tax rate falls as a result of these reforms, that changes the arithmetic — but it doesn't eliminate the benefit.
Here's the honest version: lower income tax rates generally reduce the pre-tax salary-packaging advantage, because you're shielding income from a lower rate. But the FBT exemption on eligible electric vehicles remains separate from income tax rates entirely — and that's where a lot of the real value sits right now, independent of this reform package.
If you're already in a novated lease, nothing changes immediately. If you're trying to decide whether to start one, locking in pre-tax savings at today's rates — before any legislated changes take effect — is worth considering. The right move depends on your income, your vehicle choice, and the timing. According to the Treasury Ministers release [[Source 1]](https://ministers.treasury.gov.au/ministers/Jim-Chalmers-2022/media-releases/Government-another-step-closer-to-delivering-tax-reforms), the reform is designed to deliver cuts broadly to wage earners, so the effect will vary by income band.
Common questions
Does this tax reform affect the FBT exemption on electric vehicles?
No — the EV FBT exemption is separate legislation. This reform package deals with income tax rates, CGT treatment, and small business concessions. The EV exemption remains in place under existing law unless Parliament acts to change it specifically.
If my income tax rate drops, does my novated lease become less valuable?
Potentially, yes — a lower marginal rate means the pre-tax salary packaging advantage is slightly reduced. But the overall benefit of a novated lease comes from multiple sources: GST savings on the vehicle purchase, bundled running costs, and FBT concessions. The income tax component is just one part of the picture.
Should I start a novated lease now before the reforms pass?
That depends on your situation — income, vehicle type, and how long you plan to keep the car. The reforms haven't passed the Senate yet, so current rules apply today. We'd recommend getting a personalised quote rather than making assumptions either way.
When will these tax changes actually take effect?
The legislation still needs to pass the Senate. Even after passage, the commencement date will be set by the bill itself — typically a financial year boundary. Nothing has changed yet.
Is millarX licensed to give tax advice?
No — millarX is an ACL-licensed novated lease provider and AFCA member, not a registered tax agent. For advice specific to your tax position, speak with your accountant or a registered tax adviser.