There may be some tax saving opportunities with the announced updated Stage 3 Tax Cuts. The Federal Government announced that they will amend the legislated Stage 3 Tax Cuts that are scheduled to begin on 1 July 2024.
It was decided to help redistribute some of the planned tax savings for higher income earners to lower income earners, to assist them with cost-of-living pressures.
Summary of the changes
These are the planned changes to tax rates for 2025:
| Current Tax Rates | Original Stage 3 Tax Cuts | Redesigned Stage 3 Tax Cuts | |||
| 2024 Income | 2024 Tax Rate | 2025 Income | 2025 Tax Rate | 2025 Income | 2025 Tax Rate |
| $0 – $18,200 | 0% | $0 – $18,200 | 0% | $0 – $18,200 | 0% |
| $18,201 – $45,000 | 19% | $18,201 – $45,000 | 19% | $18,201 – $45,000 | 16% |
| $45,001 – $120,000 | 32.5% | $45,001 – $200,000 | 30% | $45,001 – $135,000 | 30% |
| $120,001 – $180,000 | 37% | $135,001 – $190,000 | 37% | ||
| >$180,000 | 45% | >$200,000 | 45% | >$190,000 | 45% |
As a result of these changes:
- High income earners earning $200,000 will have their proposed tax saving slashed from $9,075 to $4,529.
- Individuals earning under $45,000 and not eligible for the original State 3 Tax Cuts will now benefit, with a tax rate of 16% being reduced from 19% – which is worth a maximum of $804 for someone earning $45,000 or above.
- An individual earning $90,000 will receive a tax cut of $1,929 – up from $1,125 under the original Stage 3 Tax Cuts.
While the original Stage 3 Tax Cuts have been legislated, the updated Stage 3 Tax Cuts still need to be agreed to by Federal Parliament.
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This content has been prepared by Wilson Pateras to further our commitment to proactive services and advice for our clients, by providing current information and events. Any advice is of a general nature only and does not take into account your personal objectives or financial situation. Before making any decision, you should consider your particular circumstances and whether the information is suitable to your needs including by seeking professional advice. You should also read any relevant disclosure documents. Whilst every effort has been made to verify the accuracy of this information, Wilson Pateras, its officers, employees and agents disclaim all liability, to the extent permissible by law, for any error, inaccuracy in, or omission from, the information contained above including any loss or damage suffered by any person directly or indirectly through relying on this information. Liability limited by a scheme approved under Professional Standards Legislation.