Albanese Tax Reforms 2026: What It Means for Salary Packagers
The Albanese Government's 2026 tax reforms cut taxes for 13 million workers. Here's what PAYG employees should know about salary packaging and novated leasing.
On 23 June 2026, the Albanese Government confirmed it is another step closer to passing its tax reform package — with the Greens confirming support for the first tranche of legislation [Source 1]. The reforms are pitched at three groups: workers, first home buyers, and small businesses.
For PAYG employees, the headline is a tax cut for over 13 million workers and changes to how labour income and asset income are taxed relative to each other. The legislation still needs to clear the Senate, and the Government has flagged that three right-wing parties are expected to vote against it — so this isn't law yet. But if it passes, your take-home pay calculation changes — and so does the maths on salary packaging strategies like novated leasing.
What this means for novated lease customers
A lower personal income tax rate means the pre-tax benefit of novated leasing shifts. Novated leasing works by redirecting some of your pre-tax salary to cover car running costs, reducing your taxable income. The bigger the gap between your marginal tax rate and the FBT rate (currently 47%), the more powerful that trade-off is. If your effective tax rate falls, the relative value of pre-tax salary packaging adjusts with it — which is worth modelling properly before you sign anything.
That said, the core mechanic doesn't disappear. If you're a PAYG employee earning above the lower tax thresholds — especially anyone in the 32.5% or 37% bracket — novated leasing can still deliver meaningful potential savings on running costs compared to paying out of post-tax income. The EV exemption from FBT (for eligible battery electric vehicles) remains a separate, significant lever entirely, and is unaffected by these income tax changes [Source 1].
Bottom line: tax reform creates a reason to revisit your numbers — not a reason to write off salary packaging. If you set up a novated lease a couple of years ago and haven't reviewed it since, now is a reasonable time to check whether the structure still makes sense for your updated income profile.
Common questions
Does this tax reform change how FBT on novated leases works?
Not directly. The reforms announced target personal income tax rates and CGT treatment, not FBT. The FBT rate remains 47%. However, your personal tax rate affects how much benefit you get from pre-tax salary packaging — so any change to your marginal rate is worth factoring into your lease review.
Is the EV FBT exemption affected by these reforms?
No. The EV FBT exemption is separate legislation and is not part of this tax reform package. Eligible battery electric vehicles under the luxury car threshold remain exempt from FBT under the existing rules.
When do these tax cuts actually take effect?
The legislation still needs to pass the Senate. As of the date of this article, it has Greens support but faces opposition from other parties. We'll update this page when the bill receives Royal Assent.
Should I wait to set up a novated lease until after the reforms pass?
That depends on your personal circumstances, vehicle needs, and current tax position. There's no universal answer. What we'd say is: don't make a decision based on pending legislation alone — talk to someone who can model your specific numbers.
Does millarX offer independent advice on how tax changes affect my lease?
millarX is ACL-licensed (ACL 569484) and AFCA-registered, and we can walk you through how your income tax position interacts with novated leasing mechanics. We don't provide personal tax advice — for that, you need a registered tax agent — but we can show you the leasing side of the equation clearly.