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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