The latest updates to tax cuts bring significant adjustments to income ranges and tax rates across various tax brackets, taking effect from July 2024. For Australian workers earning between $18,201 and $45,000 annually, the marginal tax rate of 19% is set to decrease to 16%. Moreover, the threshold for the existing 32.5% tax bracket will shift from $120,000 per year to $135,000, resulting in a reduced tax rate of 30% for these earners.
Rather than eliminating the 37% tax bracket, originally planned for the initial stage 3 tax cuts, the government has opted to retain it. The revised threshold now encompasses individuals earning between $135,001 and $190,000.
For individuals earning over $190,001, they will remain in the 45% tax bracket. However, they stand to benefit from the lowered tax rates applicable to other tax brackets, thereby reducing the overall tax burden on a portion of their income.
Summary of Changes:
This will increase the take-home pay for most Australians. According to the Australian Bureau of Statistics, in 2023, the median weekly salary in Australia was $1,300. In the 2023-24 financial year, the tax withheld on this amount was $265.17, leaving $1,034.83 in take-home pay after tax. In contrast, under the new stage 3 tax cuts, a lower amount of $238.85 tax will be withheld. This changes the take-home pay of someone on the median weekly salary in Australia to $1,061.15, which is $26.32 more per week than the previous year.
The Australian government has introduced these latest tax cuts to alleviate the burden of high inflation, escalating interest rates, and the pressures of increased living costs experienced nationwide.
Unsure how the stage 3 Tax cuts will affect you? Contact our Walker Hill Accounting team today! support@walkerhill.com.au.
