Stage 3 Tax Cuts: from 2024–2025
The stage-three tax cuts were originally proposed by the former Morrison government back in mid-2019, with the cuts due to officially come into effect on July 1, 2024, to mark the beginning of the new financial year. There may be some adjustments to the tax cuts may be necessary due to today’s challenging economic climate.
The stage-three tax cuts will abolish the 37% marginal tax bracket. Currently, this tax bracket applies to those earning between $120,000 to $180,000. It will also increase the top tax bracket from $180,000 to $200,000. The stage three tax cuts are primarily aimed at giving tax relief to higher-income earners,
“An individual earning $120,000 will save $1,875 a year, a person earning $180,000 will save $6,075 and a person earning $200,000 will save $9,075,” Forbes Advisor Australia, director of Accumulate Accountants, Greg Mawer FCPA says.
“[This] means a high earning couple (both at or over $20,000 each) will save $18,150 of tax per year.”
Therefore, from 1 July 2024, there will only be three personal income tax rates: 19%, 30% and 45%. From 1 July 2024, taxpayers earning between $45,000 and $200,000 will face a marginal tax rate of 30%. With these changes, around 94% of Australian taxpayers are projected to face a marginal tax rate of 30% or less.
Keeping in mind that what your total income for the year would be after your income tax and the Medicare levy has been paid.