The working Australians tax offset (WATO)
Updated 13 November 2026.
The working Australians tax offset (WATO) is a new tax offset of up to $250 a year for Australian residents with income from work. It starts in the 2027–28 income year, so you'll first see it in tax returns lodged from July 2028. It became law in June 2026.
Who gets it
- Australian residents for tax at any time in the year.
- Whose net labour income (work income such as wages, salary or sole trader income, less work-related deductions) is more than the $18,200 tax-free threshold.
How much
Most workers get the full $250. If the income tax on your net labour income is less than $250, the offset is reduced to match; the exact formula for that will be set by the Minister in a legislative instrument. Like the low income tax offset, it's non-refundable: it can reduce your tax to zero but isn't paid out beyond that, and it doesn't reduce the Medicare levy.
Combined with the 14% rate from 1 July 2027, it means a worker can earn about $19,985 before paying income tax, or about $24,985 with the low income tax offset.
Estimated tax in 2027–28
For a resident with no other income, after the $1,000 standard deduction (2027–28 thresholds for the Medicare levy aren't published yet, so the latest ones are used):
| Salary | WATO | Tax for the year |
|---|---|---|
| $30,000 | $250.00 | $660.90 |
| $50,000 | $250.00 | $5,417.00 |
| $80,000 | $250.00 | $15,282.00 |
| $120,000 | $250.00 | $28,082.00 |
| $200,000 | $250.00 | $58,882.00 |
Will my pay change?
No. The explanatory memorandum says WATO isn't expected to be built into the PAYG withholding tables, so it shows up when you lodge your return. See the full tax rates or estimate 2027–28 in the tax refund calculator.