Working Australians will receive a $250 tax benefit under a key policy announced in the Albanese government’s 2026–27 federal budget.

The new Working Australians Tax Offset (WATO) is expected to benefit around 13.3 million taxpayers and will take effect from July 1, 2027, with payments automatically included in annual tax returns.

Australian Treasurer Jim Chalmers said the measure represents one of the most significant permanent increases to the effective tax-free threshold in more than a decade.

According to budget estimates, the threshold will rise to $19,985, while eligible low-income earners could receive a threshold of up to $24,985 through the Low Income Tax Offset.

The government said the initiative forms part of a broader cost-of-living relief package, which also includes previously announced tax cuts and a $1,000 instant tax deduction. Officials claim the average worker will be $2,816 better off by 2028, equivalent to around $54 per week.

The tax offset is expected to cost the government approximately $6.4 billion over its first two years.

To help fund the new tax cuts, the government announced plans to impose a 30 per cent minimum tax rate on discretionary trusts from July 1, 2028.

Discretionary trusts are commonly used by wealthy individuals and families to reduce tax liabilities by distributing income among beneficiaries. Government figures showed that families using discretionary trusts paid, on average, around four per cent less tax than households on similar incomes without such trusts.

Treasurer Chalmers said the new minimum tax aims to create a fairer tax system by better aligning taxes paid on trust income with taxes paid on wages.

The government claims that more than 90 per cent of private trust wealth is held by the wealthiest 10 per cent of Australian households.

However, the new minimum tax will not apply to fixed or widely held trusts, charitable trusts, special disability trusts, complying superannuation funds, deceased estates, primary production income, and certain trusts relating to vulnerable minors.

The government also announced an expansion of rollover relief measures for three years from July 1, 2027, to assist businesses and individuals in restructuring their financial affairs.

Budget forecasts estimate that the new trust tax policy will generate $4.5 billion in revenue during its first year of implementation in 2029–30.