Stage 3 Personal Tax Cuts

The government has confirmed revisions to Stage 3 personal tax cuts, effective from the 2024–25 financial year.

From 1 July 2024, the revised Stage 3 tax cuts will:

• reduce the 19 per cent tax rate to 16 per cent
• reduce the 32.5 per cent tax rate to 30 per cent
• increase the threshold above which the 37 per cent tax rate applies from $120,000 to $135,000
• increase the threshold above which the 45 per cent tax rate applies from $180,000 to $190,000.

The tax-free threshold remains at $18,200.

No taxpayer pays more tax than 2023–24 rates, but higher-income individuals get a reduced tax cut under the proposed Stage 3 changes.

Taxable incomes up to $45,000 benefit from a proposed reduction in the marginal tax rate from 19% to 16%, with a maximum saving of $804.

Middle-income taxpayers receive an extra $804 tax cut on top of the currently legislated plan.

The proposed changes' benefit diminishes at taxable incomes around $147,000, with individuals at this level being $36 worse off (though saving $3,729 compared to 2023–24 rates).

For taxpayers with incomes of $200,000 and above, the tax cut is $4,529 instead of $9,075, representing a halving of the Stage 3 benefit.

The Bill has passed through the Senate without any amendments. 

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