Understanding the 2026 Tax and LISTO Changes

Jake is 35, earns $40k and has 70k in Super. The 2026 legislative changes reduce his tax by approximately $200 in 2026 and ~$400 in 2027. In a cost-of-living crisis, that's going straight to essentials - rent, groceries, petrol.

What Changed in 2026

Two separate policy changes affect clients like Jake:

• Personal income tax cuts: The second marginal tax bracket drops from 16% to 15% in FY 2026-27, then to 14% in FY 2027-28. This provides ongoing tax relief throughout Jake's working life.

  
  

• LISTO expansion: From 1 July 2027, the Low Income Superannuation Tax Offset (LISTO) income threshold increases from $37,000 to $45,000. This is a hard cutoff—you qualify or you don't. Salary increases with inflation mean this benefit has a limited window.

  
  

The Immediate Impact

Here's how the tax cut affects Jake:

Metric	Before	After	Difference
Year 1 Income Tax	$3,700	$3,500	-$200

The $200 income tax reduction provides immediate cashflow relief. In the current cost-of-living environment, this realistically flows to living expenses.

If Jake Could Save More

Of course, if Jake could save some of the tax benefit, the outcomes improve. Here are three scenarios for illustration:

Scenario	Total Wealth at Retirement
Spend the $200 (base case)	$414,600
Save $200/year to cash	$421,600
Contribute $200/year to super	$425,500

The reality? Most people in Jake's situation are dealing with cost-of-living pressures. But understanding these possibilities helps frame the conversation when circumstances allow.

The Long-Term Compounding Effect

Here's what happens over 30 years of the LISTO change:

Metric	Before	After	Difference
Super at Retirement	$407,900	$414,600	+$6,700
Annual Retirement Income	$57,200	$57,900	+$700

LISTO eligibility adds $6,700 to super at retirement. That translates to $700 extra in annual retirement income.

This happens automatically through the super system. It's not dependent on the client making active decisions with their tax savings. The super fund receives the offset, and it compounds over decades.

The LISTO Window

This is where government examples and real-world projections diverge.

ASFA's explainer on the legislation often shows someone earning $44k with their salary staying constant until retirement. It's a useful illustration—but it's not realistic.

The reality: Salaries increase with inflation, typically around 2.5% annually.

What this means for Jake:

• He starts at $40k in 2026

• He qualifies for LISTO from 1 July 2027

• With 2.5% wage inflation, his salary crosses $45k by 2031

• He receives LISTO for approximately 4-5 years, not his entire career

  
  

After that, he exceeds the hard $45k threshold and loses eligibility. There's no taper, no phase-out - it's binary.

This is why the $6,700 super increase reflects the reality of a limited eligibility window, not a 30-year benefit. Static salary assumptions overstate the long-term impact.

Making Advice Accessible

At Amply, we make it easier for you to serve people who often can't afford traditional advice. Capture their data, model retirement scenarios, and produce reports - without the administrative burden making it uneconomical.

When legislation changes, you can model the impact: compare old rules to new rules, understand what changes, and explain it clearly to clients.

Everyone deserves to understand how policy changes affect their financial future - not just the wealthy.

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