The New $250 Working Australians Tax Offset: Who Gets It and When

There's a new $250 in the tax system with your name on it — if you work. It's called the Working Australians Tax Offset (WATO), it was announced in the 2026-27 Federal Budget, and it's now law. The government expects around 13.3 million workers to get it, including about 1.5 million sole traders (people who run their own business under their own name).

That's the vast majority of the working population. But there are two things about WATO that catch people out — one about how the $250 actually reaches you, and one about when. Miss them and you'll either be disappointed or checking the wrong tax return. Here's the plain-English version.

WATO is a tax offset, not a payment or a bonus. An offset is a discount on your tax bill: it reduces the tax you owe, dollar for dollar. So $250 of WATO means $250 less tax — which, for most people, means roughly $250 more staying in their pocket for the year.

It applies to your 'net labour income' — a slightly technical phrase that just means money you earn from working: your salary, your wages, and sole-trader business income, minus any work-related deductions tied to earning it. Money from investments, rent or a share portfolio doesn't count, because WATO is specifically a reward for working.

To get the full $250, your net labour income has to be above the tax-free threshold ($18,200) and your tax bill on that income has to be at least $250. The government reckons 97% of eligible workers will get the full amount. It's also permanent — not a one-off — so once it starts, it's a fixture of the system, and you don't have to apply. The ATO works it out automatically when you lodge.

Say Marcus earns $75,000 a year from his job in the 2027-28 income year. His income tax on that salary works out to roughly $12,750 (before the Medicare levy). Because that bill is comfortably above $250, WATO simply knocks the full $250 off it — bringing his income tax down to about $12,500.

He does nothing to claim it. He lodges his return as normal, and the ATO applies the $250 automatically. For the roughly 97% of workers whose tax bill sits well above $250, that's the whole story: a flat $250 off, every year.

WATO is what's called a non-refundable offset. That's the phrase to remember. It can wipe out tax you owe, but it can't turn into a cash refund on its own.

In practice, that only matters if you earn very little. If your tax bill on your work income is only, say, $150, WATO cancels that $150 and stops — the leftover $100 doesn't come back to you as cash. And if other offsets, like the Low Income Tax Offset, have already reduced your tax to zero, there's nothing left for WATO to reduce. You need a tax bill for it to bite.

For anyone earning a normal full-time or solid part-time wage, this is a non-issue — your tax bill is far bigger than $250, so you get the lot. It's only the lowest earners who may see less than the full amount.

This is the one that trips people up. WATO starts from the 2027-28 income year. That means the first tax return it shows up on is your 2027-28 return — the one you lodge from July 2028.

So it will not appear on the 2025-26 return you might be lodging right now (that's the year that ended 30 June 2026). It won't appear on your 2026-27 return either. If you're expecting a $250 sweetener at tax time this year, WATO isn't it.

It's easy to muddle WATO with the other changes floating around, because there have been a few. The 16% tax bracket dropping to 15% and the new $1,000 instant deduction are separate measures with their own timing. WATO is its own thing, and its clock starts on 1 July 2027.

Honestly? Not much — and that's the point. There's no form, no box to tick, no deadline to chase. If you earn income from working and you're an Australian resident for tax purposes, the ATO handles it when you lodge your 2027-28 return.

The useful move is just to file it away mentally so you're not confused later, and so you don't fall for any 'claim your $250 now' message — because there's nothing to claim and nowhere to claim it. When the 2027-28 return rolls around, it'll already be baked in.