The stage 3 tax cuts will be implemented throughout Australia beginning on 1 July 2024, here’s what you need to know and how it will affect you:
The latest changes to the tax cuts include changes to income ranges and tax rates in the marginal tax brackets. Australian workers earning between $18,201 and $45,000 a year will see their 19% marginal tax rate reduced to 16%. Additionally, the threshold for the current 32.5% tax bracket will change from $120,000 per year to $135,000. The tax rate for these workers will drop to 30%.
Instead of scrapping the 37% tax bracket, which was in the plan for the original stage 3 tax cuts, the government has chosen to keep it and change the threshold to include those earning $135,001 – $190,000.
The highest income earners making over $190,001 will continue to sit in the 45% tax bracket. However, they will receive the benefits of the lowered tax rates in other tax brackets. This will lower the tax they pay on some of their income.
For Australian Residents
| Bracket | 2023-24 Tax Rates | Revised Stage 3 Tax Cuts |
| 0% | $0-$18,200 | $0-$18,200 |
| 16% | $18,201 – $45,000 | |
| 19% | $18,201 – $45,000 | |
| 30% | $45,001 – $135,000 | |
| 32.5% | $45,001 – $120,000 | |
| 37% | $120,001 – $180,000 | $135,001 – $190,000 |
| 45% | $180,001 + | $190,001 + |
These changes will see every Australian with an increase in net pay, meaning they will take home more cash at each pay cycle. The government has altered the original stage 3 tax cuts to assist Australians with current growing pressures, such as cost-of-living, without increasing the inflationary pressure.
If you would like to discuss this, please contact our office.
