Revised stage 3 tax cuts now law
With the revised stage 3 tax cuts now law, it’s a good
time to understand how these changes will affect you
and how to plan your taxes for the future more
effectively. The new rates will apply from 1 July 2024.
For the current income year, an individual who earns
$67,600 annually (the median income from the latest
Australian Bureau of Statistics data) will be expected
to pay around $12,437 in income tax. With the new tax
rates coming in for the 2024–2025 income year,
assuming they earn the same amount, they will be
paying $11,068 in income tax – a tax saving of around
$1,369 for the year, or around $26 per week.
An individual who earns $98,176 annually (the average
income from the latest average weekly ordinary time
earnings data) will have an income tax bill of around
$22,374 for the 2023–2024 income year. However, this
will drop to $20,240 when the new rates come into
force for the 2024–2025 year, leading to a tax saving
of around $2,133 for the year, or $41 per week.
Similarly, an individual who earns $180,000 can expect
to see a tax saving of $3,729 for the year, or $71 per
week; they will pay income tax of $51,667 for 2023–
2024 versus $47,938 in 2024–2025.
These revised tax cuts were introduced as a cost-of-living
relief measure by the government to put more
money back in the pockets of Australian workers so
they can deal with recent skyrocketing inflation. By
also giving a proportional tax cut to working holiday
makers and foreign residents the government is
banking on more spending from that segment which
will boost the economy overall.
In association with the revised income tax cuts, the
government has also lifted low-income Medicare levy
thresholds for eligible singles, families, seniors and
pensioners to apply for the current income year,
meaning more low-income earners can avoid paying
the Medicare levy of 2% on top of their tax, or will pay
a reduced amount of levy.
Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
