Changes to tax cuts from 1 July 2024

The ‘Stage 3 tax cuts’ had already been legislated and were set to take effect on July 1, 2024. However, recent amendments to the scheduled tax cuts alter some personal income tax rates and the income brackets to which certain tax rates apply. Despite these changes, the tax-free threshold, which signifies the income amount exempt from taxation, will remain at $18,200. In comparison to the initial tax cuts, the revisions entail adjustments in both tax rates and income brackets:

  • Lower the 19% tax rate to 16%.
  • Restore the 37% tax bracket, initially slated for removal on July 1. Increase the income range to which this rate applies from $120,000 to $135,000.
  • Decrease the threshold for the 45% tax rate from $200,000 to $190,00

Below is a table contrasting the tax rates for the present fiscal year with both the initial Stage 3 tax cuts and the newly enacted rates:

* Plus Medicare levy of 2%. These tax rates apply to Australian resident taxpayers. Different rates apply if you’re a working holidaymaker or you’re a non-resident for tax purposes.

How will I receive the savings?

The alterations in tax rates will lead to a reduction in the amount of tax withheld from various payments you receive. For instance, employers and superannuation providers issuing income streams will adjust the tax withholding accordingly. Consequently, you will experience gradual tax savings throughout the year. No modifications are required in the way you complete your tax return.

How much tax will I save?

Below is a table summarizing the potential tax savings at various levels of taxable income. Additionally, you can utilize a calculator available on the Treasury website to estimate the tax savings under the adjusted tax rates in comparison to the tax payable in the current fiscal year.

 

Taxable income Tax liability in 2023/24 Tax liability under from 1 July 2024 Tax saving
$30,000 $1,942 $1,588 $354
$40,000 $4,367 $3,713 $654
$50,000 $7,467 $6,538 $929
$60,000 $11,067 $9,888 $1,179
$70,000 $14,617 $13,188 $1,429
$80,000 $18,067 $16,388 $1,679
$90,000 $21,517 $19,588 $1,929
$100,000 $24,967 $22,788 $2,179
$110,000 $28,417 $25,988 $2,429
$120,000 $31,867 $29,188 $2,679
$130,000 $35,767 $32,388 $3,379
$140,000 $39,667 $35,938 $3,729
$150,000 $43,567 $39,838 $3,729
$160,000 $47,467 $43,738 $3,729
$170,000 $51,367 $47,638 $3,729
$180,000 $55,267 $51,538 $3,729
$190,000 $59,967 $55,438 $4,529
$200,000 $64,667 $60,138 $4,529

 

 

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