Opposition Leader Angus Taylor announced a "tax back guarantee" on Thursday to index the bottom two income-tax thresholds to inflation [1].

The proposal aims to shield Australian workers from bracket creep, a process where inflation-driven pay raises push taxpayers into higher tax brackets despite no real increase in purchasing power. By linking thresholds to inflation, the plan seeks to ease the rising cost of living for earners [1, 2].

During his budget reply in Canberra, Taylor detailed the timeline for the implementation of the policy. "From 2028‑29, we will index the bottom two income tax thresholds to inflation," Taylor said [1].

This mechanism is designed to prevent the government from gaining a "stealth tax" increase as wages rise with inflation. Taylor said the measure "will fully protect 85 percent of income earners" [1]. While some reports suggest the protection would extend to all taxpayers, Taylor specifically cited the 85 percent figure during his address [1, 2].

"Tonight, I announce our tax back guarantee," Taylor said [1].

The announcement comes as a direct response to the national budget, positioning the opposition as a defender of low-to-middle income earners against inflationary pressures. The move focuses specifically on the lowest two brackets to ensure that those most affected by rising costs maintain their take-home pay [2, 3].

“"Tonight, I announce our tax back guarantee."”

The proposal addresses a long-standing structural issue in the Australian tax system where nominal wage growth leads to higher tax burdens without an increase in real wealth. By indexing the lower thresholds, the opposition is attempting to create a systemic buffer against inflation, which would effectively limit the government's ability to increase revenue through bracket creep for the vast majority of the workforce.