Government announces changes to the stage 3 tax cuts:
The government has introduced amendments to the legislation in relation to the stage 3 tax cuts that are due to come into effect on the 1st July 2024. The changes are expected to pass largely unopposed and will be due to become law shortly.
The overhaul of the legislation will broaden the benefits to a larger group of people with an estimated 84% of individual taxpayers expected to receive a larger tax cut in 2024-25 than they otherwise would have under the initial proposal. An individual on $200,000 a year will get a reduced, $4,529 tax cut and an individual earning $45,000 will now receive an additional $804 tax break compared to the original legislation.
The summary of proposed tax cuts are as follows:
- A reduction in the lowest marginal tax rate moving from 19% to 16%.
- Lowering the 32.5% marginal tax rate to 30% which will target individuals earning between $45,000 – $135,000.
- Reinstating the 37% marginal tax rate which was initially going to be scrapped from 1st July 2024.
- The 45% marginal tax rate will apply to income earners with taxable income over $190,000.
- Increasing the low-income threshold for Medicare levy purposes.
| 2023-24 | 2024-25 | ||
| Thresholds ($) | Rates (%) | Thresholds ($) | Rates (%) |
| 0 – 18,200 | Tax free | 0 – 18,200 | Tax free |
| 18,201 – 45,000 | 19 | 18,201 – 45,000 | 16 |
| 45,001 – 120,000 | 32.5 | 45,001 – 135,000 | 30 |
| 120,001 – 180,000 | 37 | 135,001 – 190,000 | 37 |
| Over 180,000 | 45 | Over 190,000 | 45 |
