Stage 3 Tax Cuts Come Into Effect 1 July 2024
With the amended “Stage 3” tax cuts scheduled to commence on 1 July 2024, it’s crucial to bear in mind the revised tax brackets and thresholds during the tax planning process for this year as well.
These proposed changes include:
- Reducing the 19% tax rate to 16% (for incomes between $18,200 and $45,000).
- Reducing the 32.5% tax rate to 30% (for incomes between $45,000 and the new $135,000 threshold).
- Increasing the threshold at which the 37% tax rate applies from $120,000 to $135,000.
- Increasing the threshold at which the 45% tax rate applies from $180,000 to $190,000.
As a result of these changes, all 13.6 million taxpayers are expected to receive a tax cut. The proposed tax cuts aim to provide relief to a broad spectrum of taxpayers, from those with average incomes to higher-income individuals.
New Personal Tax Rates & Thresholds for 2024-25
Current Tax Rates
Tax Free: 0 – 18,200
19%: 18,201 – 45,000
32.5%: 45,001 – 120,000
37%: 120,001 – 180,000
45%: Greater than 180,001
New Tax Rates From 2024-2025
Tax Free: 0 – 18,200
16%: 18,201 – 45,000
32.5%: 45,001 – 135,000
37%: 135,001 – 190,000
45%: Greater than 190,001
Comparative Tax Cut Figures
Under the current plan, the tax cuts are projected to be as follows:
- A person on an average income of around $73,000 will receive a tax cut of $1,504.
- A person earning $40,000 will get a tax cut of $654.
- A person earning $100,000 will receive a tax cut of $2,179.
- A person earning $200,000 will still get a tax cut of $4,529.
The Stage 3 Tax Cuts have been a focal point of tax policy discussions, with implications for individuals across various income brackets.
While these cuts will not be coming into effect until 1 July 2024, it is important to consider in your tax planning preparation for the 2024-2025 year.
Wondering how this will affect you? Speak with a trusted tax accountant at Lee & Lee Accountants today.