The Albanese government is on track to collect far more personal income tax than expected this financial year, as higher‑than‑forecast inflation pushes workers into higher tax brackets.
Treasury forecasts inflation of 3.75% for 2025–26. However, CPI has already risen 2.7% in the first six months, meaning the full‑year figure is likely to be higher. The Reserve Bank is also expected to revise its inflation outlook upward.
Higher inflation typically leads to higher nominal wages, pushing more workers into higher tax brackets and increasing average tax rates.
