Stage 3 tax cuts

The Australian government has introduced Stage 3 tax cuts, which will take effect from July 1, 2024. These changes are set to impact many Australians, adjusting the amount of tax you’ll pay based on your income. Here’s a breakdown of what these tax cuts mean for you:

New Tax Rates and Brackets

The Stage 3 tax cuts will adjust income tax rates and brackets as follows:

How Will This Affect You?

• For those earning up to $45,000: Expect a reduction in tax rate from 19% to 16%, potentially increasing your take-home pay.
• Incomes between $45,001 and $135,000: You’ll be taxed at a 30% rate, simplifying the tax bracket and potentially reducing the amount of tax you pay.
• Earning between $135,001 and $190,000: Your tax rate remains at 37%, but the bracket has been adjusted to accommodate higher incomes without moving to the 45% rate.
• Above $190,000: The tax rate stays at 45%, with no change for the highest earners.

Key Takeaways

• Wider Tax Brackets: Most notably, the 37% tax bracket has been expanded, and a new 30% rate introduces a significant change for those earning up to $135,000.
• More Money in Your Pocket: Lower and middle-income earners are the primary beneficiaries, with reduced rates designed to alleviate cost-of-living pressures.
• A Simpler System: These changes aim to simplify tax calculations and ensure that a larger proportion of earners benefit from reduced tax rates.