Stage 3 Tax Cut for all employees in Australia

“All 13.6 million Australian taxpayers will receive a tax cut.” - Sudhesh K Valappil (VRS Realinvest)

Stage - Tax Cut:

All Australians are feeling cost-of-living pressures. That’s why the Australian Government is delivering tax cuts for all Australian taxpayers from 1 July 2024.

The Australian Government has made changes to individual income tax rates and thresholds. This will apply to all taxable income you earn from 1 July 2024. The changes will not impact your 2023–24 tax return.

From 1 July this year, these changes 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 37 per cent tax threshold from $120,000 to $135,000

• increase the 45 per cent tax threshold from $180,000 to $190,000.

These changes will deliver a tax cut to every Australian taxpayer.

When will I receive my tax cut?

The individual income tax rates and thresholds will change from 1 July 2024.

This means from 1 July, for most taxpayers, you will pay less tax each payday and keep more of what you earn.

Some taxpayers will receive their tax cut when a tax return is lodged and processed after the end of the 2024‑2025 financial year.

You can use the tax cut calculator to estimate your annual tax cut.

Who will benefit from the tax cuts?

All 13.6 million Australian taxpayers will receive a tax cut from 1 July 2024.

The tax cuts will also create opportunities for people to take on more hours of work and keep more of what they earn.

New individual tax rates and thresholds for 2024–25

The below table compares the individual income tax rates and thresholds for 2023–24.

The below table compares the individual income with the new tax rates and thresholds for 2024–25.

How do income tax rates and thresholds work?

New individual income tax rates and thresholds will come into effect from 1 July 2024. If you are an Australian taxpayer, you are entitled to the tax-free threshold of $18,200. This means you can earn up to $18,200 each year without paying tax.

If you earn between $18,201 and $45,000:

• your first $18,200 remains tax free, and

• you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000.

If you earn between $45,001 and $135,000:

• your first $18,200 remains tax free, and

• you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000, plus

• 30 cents tax on every dollar you earn between $45,001 and $135,000.

If you earn between $135,001 and $190,000:

• your first $18,200 remains tax free, and

• you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000, plus

• 30 cents tax on every dollar you earn between $45,001 and $135,000, plus

• 37 cents tax on every dollar you earn between $135,001 and $190,000.

If you earn over $190,000:

• your first $18,200 remains tax free; and

• you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000, plus

• 30 cents tax on every dollar you earn between $45,001 and $135,000, plus

• 37 cents tax on every dollar you earn between $135,001 and $190,000, plus

• 45 cents tax on every dollar you earn above the $190,000 threshold.

Certain taxpayers, such as low-income taxpayers and senior Australians may also be eligible for tax offsets that directly reduce their final tax liability.

Use the calculator - Tax cut calculator (taxcuts.gov.au)

For more information on paying tax on your income, visit the Australian Taxation Office website.