The federal government has announced an overhaul of the previous Coalition government stage 3 tax cuts and introduced various changes in the personal tax rates that apply from 2024-25 income year and onwards.
Changing the original course of action, as announced by the previous Coalition Government, the new tax changes aim to focus on the low and middle income earners to help with the cost-of-living pressures.
The bills amending income tax rate thresholds, tax rates for individuals and Medicare levy low income thresholds have been introduced in the Parliament and await approval to become law.
The following changes have been announced to the personal tax rates:
- the lowest rate of income tax will be reduced form 19 cents in a dollar, down to 16 cents, this means a taxpayer earning $50,000 per year will receive a tax cut worth over $900 a year.
- the second tax rate will be cut from 32.5 percent down to 30 per cent and that will apply to an annual income of up to $135,000.
- The 37 per cent rate will be retained and will now apply from $135,000 – an increase up from $120,000.
- In the first increase since 2008, the threshold for the top tax rate of 45 per cent will also be increased. It will now kick in at $190,000, up from $180,000.
You will roughly receive the following tax cuts, based on your annual income:
Proposed changes to the low-income Medicare levy threshold
The income threshold at which taxpayers need to pay a 2% Medicare levy increase by 7.1 per cent, in line with inflation.
The low income threshold will rise to $26,000, up from the previous benchmark of $24,276. The threshold for seniors and pensioners will increase to $41,089, while families will be able to earn $43,846 before the levy kicks in.
Other matters
A 12-month long price enquiry will be conducted by the Australian Competition and Consumer Commission (ACCC) to scrutinise the supermarket pricing and the difference between farm gate and retail pricing shoppers end up paying.
Please note, the proposed changes are currently in the announcement stage and require parliamentary approval to become law.
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We can help you work out the exact tax cuts you may receive based on your current or expected annual income post 1 July 2024.
Please feel free to contact our office if you have any queries in relation to this matter.
This information does not constitute financial or legal advice and is for general information purposes only. Please contact DLA Partners for specific advice relating to your particular circumstances.