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.

From 1 July 2024, the 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.

2023-24		2024-25
Thresholds	Rates	Thresholds	Rates
$0 – 18,200	Tax free	$0 – 18,200	Tax free
$18,201 – 45,000	19%	$18,201 – 45,000	16%
$45,001 – 120,000	32.5%	$45,001 – 135,000	30%
$120,001 – 180,000	37%	$135,001 – 190,000	37%
Over $180,000	45%	Over $190,000	45%

See estimate examples below or utilise the Treasury’s tax cut calculator.

Income	$67,600	$98,176	$180,000
Current tax (2023-2024)	$12,437	$22,374	$51,667
New tax (2024-2025)	$11,068	$20,240	$47,938
Tax saving (per year)	$1,369	$2,133	$3,729
Tax saving (per week)	$26	$41	$71

Medicare Levy

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.

If you have any questions how these changes affect your tax, please contact our accountants today.