Stage Three tax cuts
Tax cuts 2024
Tax Cuts are meant to be here from 1/7/2023
Just to refresh, here’s a simplified version of what the brackets are now:
Earn up to $18,200 – pay no tax
Earn $18,201 to $45,000 – pay a 19 per cent tax rate
Earn $45,001 to $120,000 – pay a 32.5 per cent tax rate
Earn $120,001 to $180,000 – pay a 37 per cent tax rate
Earn $180,001 and higher– pay a 45 per cent tax rate
And here’s what the brackets would be if stage 3 is rolled out as planned:
Earn $18,200 – pay no tax
Earn $18,201 to $45,000 – pay a 19 per cent tax rate
Earn $45,001 to $200,000 – pay a 30 per cent tax rate
$200,001 and higher – pay a 45 per cent tax rate
This is a great tax cut for everyone with taxable income of over $45000. But perhaps mostly for earners over $120000.
ATO website has not updated to the new rates as of yet, as we are anticipating the formalisation of it in the May Budget 2024 and ensuing law changes to take it into effect.
It may have an impact on reducing the tax advantages of a company which small business entities are taxed at 25%. Which is becoming closer to the 30% tax rate of the $45001 to $200000 tax band.
New Stage three tax cuts
However, on the 25/1/2024 the prime minister has announced differently:
New personal tax rates and thresholds for 2024-25
| Current tax rates | |
|---|---|
| 0 –18,200 | Tax free |
| 18,201 – 45,000 | 19 |
| 45,001 – 120,000 | 32.5 |
| 120,001 – 180,000 | 37 |
| >180,001 | 45 |
| New tax rates from 2024–25 | |
|---|---|
| 0 –18,200 | Tax free |
| 18,201 – 45,000 | 16 |
| 45,001 – 135,000 | 30 |
| 135,001 – 190,000 | 37 |
| >190,001 | 45 |
Importantly this has deferred the tax cuts for a year and nowhere near as generous as the planned stage 3 tax cuts.
I understand the tax cuts may have increased the inflationary pressure, the referendum failure cost of living pressures, but this seems to have overridden the mandated promise to keep the stage 3 tax cuts when the Albanese government was elected.
Find out your tax cut here
