Stage 3 Tax Cuts Scheduled to Begin on 1 July 2024

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 RatesOriginal Stage 3 Tax CutsRedesigned Stage 3 Tax Cuts
2024 Income2024 Tax Rate2025 Income2025 Tax Rate2025 Income2025 Tax Rate
$0 – $18,2000%$0 – $18,2000%$0 – $18,2000%
$18,201 – $45,00019%$18,201 – $45,00019%$18,201 – $45,00016%
$45,001 – $120,00032.5%$45,001 – $200,00030%$45,001 – $135,00030%
$120,001 – $180,00037%$135,001 – $190,00037%

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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