The Federal Government has announced an overhaul of the previous Coalition government Stage 3 tax cuts and introduced various changes in the personal tax rates that apply from 2024-25 income year and onwards.
Changing the original course of action, as announced by the previous Coalition Government, the new tax changes aim to focus on the low and middle income earners to help with the cost-of-living pressures.
The following changes have been announced to the personal tax rates:
- The lowest rate of income tax will be reduced from 19 cents in a dollar, down to 16 cents, this means a taxpayer earning $50,000 per year will receive a tax cut worth over $900 a year.
- The second tax rate will be cut from 32.5% down to 30% and that will apply to an annual income of up to $135,000.
- The 37% tax rate will be retained and will now apply from $135,000 – an increase up from $120,000.
- In the first increase since 2008, the threshold for the top tax rate of 45% will also be increased. It will now kick in at $190,000, up from $180,000.
You will roughly receive the following tax cuts, based on your annual income:
Other matters
In addition to changing the tax rates and thresholds, the Federal Government will also increase the low-income Medicare threshold and exempt more low-income earners from the 2% Medicare levy charge, it is yet to be seen if this increase will be the usual increase by consumer price index (CPI) or more.
A 12-month long price enquiry will be conducted by the Australian Competition and Consumer Commission (ACCC) to scrutinise the supermarket pricing and the difference between farmgate and retail pricing shoppers end up paying.
Please note, the proposed changes are currently in the announcement stage and require parliamentary approval to become law.
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We can help you work out the exact tax cuts you may receive based on your current or expected annual income post 1 July 2024.
Please feel free to contact our office if you have any queries in relation to this matter.
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Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.