14/05/2026
Over the last three years the Menzies Research Centre has been making the case for a fairer tax system through automatic indexation of income tax thresholds. Tonight, the Coalition has adopted this policy.
If elected, the Coalition will automatically index tax brackets to combat bracket creep. We congratulate Angus Taylor MP on this commitment and urge all parties to adopt it.
Bracket creep is the hidden tax increase that occurs when tax thresholds remain fixed as incomes rise with inflation. It erodes real wages and take-home pay, disproportionately affects young and middle-income Australians, reduces incentives to work and discourages aspiration.
Most egregiously, bracket creep has allowed governments to fund new spending through automatic revenue increases without transparency or accountability.
That's why the Menzies Research Centre has been fighting for change. Our report, "Stop the Creep", proposes a costed package to index income tax brackets to inflation.
Automatic indexation is the honest, principled fix. Without reform, Australians will continue to face automatically rising tax burdens each year, and governments will remain shielded from the scrutiny that should accompany every new spending commitment.
The majority of developed nations adopt some form of tax bracket indexation to offset inflation. It's time Australia did too.
Read our income tax indexation report here. https://www.menziesrc.org/latest-reports-and-submissions/stop-the-creep
