Australia’s annual tax season is underway, with millions of taxpayers preparing to lodge their 2025–26 tax returns and many expecting a welcome financial boost after another year of cost-of-living pressure.

Recent survey data suggests that more than eight million Australians anticipate receiving a tax refund this year, with the average expected payment sitting at around $1,200. For many households, the refund is expected to provide temporary relief as families continue managing higher living expenses.

Comparison surveys indicate that many taxpayers already have plans for how they will use the money. Paying down household bills, reducing credit card balances, building emergency savings and covering everyday expenses rank among the most common priorities. Others intend to use the refund for home improvements, holidays or major purchases.

While expectations are high, the final amount each taxpayer receives depends on individual circumstances, including income earned during the financial year, tax withheld by employers, deductions claimed and any government offsets or obligations that apply.

The Australian Taxation Office (ATO) has reminded taxpayers that lodging too early can delay processing if employers, banks, health funds or government agencies have not yet submitted all required information. Officials recommend waiting until income statements and other financial data have been marked as “tax ready” before submitting a return.

Tax professionals also encourage Australians to review deductible work-related expenses carefully and ensure they keep appropriate records. Common deductions may include work-related travel, self-education costs, professional memberships and home office expenses where eligibility requirements are met.

At the same time, the ATO has warned it will continue using sophisticated data-matching technology to identify inaccurate claims and unusual deductions. Taxpayers are encouraged to claim only expenses they are entitled to and to maintain supporting documentation if requested.

The new financial year also brings several broader tax changes, including the reduction in the lowest marginal income tax rate from 16 per cent to 15 per cent for eligible income brackets. While those changes will affect take-home pay over the coming year, they are separate from refunds relating to the financial year that has just ended.

Financial advisers note that a tax refund can provide an opportunity to strengthen personal finances rather than simply increase spending. Depending on individual circumstances, some households may benefit from paying down high-interest debt, adding to emergency savings or making additional superannuation contributions.

For Australians who owe tax rather than receiving a refund, experts recommend lodging on time and contacting the ATO early if they need assistance managing payments. The ATO offers payment plans for eligible taxpayers experiencing financial difficulty.

With millions of returns expected over the coming weeks, tax professionals expect another busy filing season. Whether taxpayers receive a large refund, a smaller payment or have tax to pay, ensuring returns are accurate and supported by complete information remains the best way to avoid delays and amendments.