What you need to know about the latest tax cuts

You might have heard that PM Anthony Albanese’s government has made a few (significant!) tweaks to the planned tax cuts for the 2024-25 financial year. So now that they’ve gone through, what’s the scoop, and how will it affect you? We’re so glad you asked! 

So what’s changed?

Unlike the original stage three tax cuts passed by the coalition government back in 2018, and then expanded in 2019, every taxpayer will now be receiving a tax cut from July 1.

However! To make sure that these tax changes don’t cost more than the $20 billion+ that was budgeted to accommodate for these cuts, higher income earners will be getting less than was originally promised. 

These higher income earners are the tax payers earning more than $147,000 per year, and while they will still be receiving significant tax cuts, for some it could be up to 50% less than what they were expecting. 

What are the changes for each income tax bracket? 

• For people earning between $18,200 and $45,000 the tax rate will reduce from 19 per cent to 16 per cent
• For people earning between $45,000 and the new $135,000 threshold the tax rate will reduce from 32.5 per cent to 30 per cent
• The current 37 per cent tax rate threshold will increase from $120,000 to $135,000
• The current 45 per cent tax rate threshold will increase from $180,000 to $190,000.

So what does this mean? 

According to the Labour Government, as a result of these changes, on July 1:

• All 13.6 million taxpayers will receive a tax cut – and 2.9 million more taxpayers will receive a tax cut compared to Morrison’s plan.
• 11.5 million taxpayers (84 per cent of taxpayers) will now receive a bigger tax cut compared to Morrison’s plan.
• 5.8 million women (90 per cent of women taxpayers) will now receive a bigger tax cut compared to Morrison’s plan.
• A person on an average income of around $73,000 will get a tax cut of $1,504 – that’s $804 more than they were going to receive under Morrison’s plan.
• A person earning $40,000 will get a tax cut of $654 – compared to nothing under Morrison’s plan.
• A person earning $100,000 will get a tax cut of $2,179 – $804 more than they would receive under Morrison’s plan.
• A person earning $200,000 will still get a tax cut, but the benefit will be slashed to around half of what was expected, from $9075 to  $4,529.

A look at the current, originally planned and new tax rates for 2024-25:

If you have any questions about the changes and what they could mean for you or your business, please feel free to give us a call anytime!

Share this