Stage 3 Tax Cuts Come Into Effect 1 July 2024

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.

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