Breaking Down the Latest Tax Cuts: What You Need to Know
Hey there! Heard about the recent tweaks to the planned tax cuts for the 2024-25 financial year? Let’s dive into what’s new and how it might affect you!
What’s Changed?
The latest stage three tax cuts have been approved under PM Anthony Albanese’s government, and they come with some significant adjustments. Unlike the original plan passed in 2018 and expanded in 2019, every taxpayer will now receive a tax cut starting from July 1.
However, to keep the costs within the budgeted $20 billion+, higher income earners (those making more than $147,000 per year) will receive less than initially promised. For some, this reduction could be up to 50% less than expected.
Changes for Each Income Bracket
Here’s a breakdown of the changes by income tax bracket:
- For incomes between $18,200 and $45,000, the tax rate will reduce from 19% to 16%.
- Incomes between $45,000 and the new $135,000 threshold will see the tax rate decrease from 32.5% to 30%.
- The current 37% tax rate threshold will rise from $120,000 to $135,000.
- The 45% tax rate threshold will increase from $180,000 to $190,000.
What Does This Mean for You?
According to the Labour Government’s projections, starting July 1:
- All 13.6 million taxpayers will receive a tax cut, with 2.9 million more taxpayers benefiting compared to the previous plan.
- 11.5 million taxpayers (84% of taxpayers) will now receive a larger tax cut than under the previous plan.
- 5.8 million women (90% of female taxpayers) will enjoy a bigger tax cut compared to the prior plan.
- An individual earning around $73,000 will receive a tax cut of $1,504—$804 more than under the previous plan.
- Someone earning $40,000 will get a tax cut of $654, compared to nothing previously.
- A $100,000 earner will enjoy a tax cut of $2,179—$804 more than under the previous plan.
- A $200,000 earner will still receive a tax cut, albeit reduced to around half of the expected amount, from $9,075 to $4,529.
Current vs. Planned vs. New Tax Rates for 2024-25:
| Tax Rate | 2023-24 | Original 2024-25 | New 2024-25 Rates |
| 0% | $0-$18,200 | $0-$18,200 | $0-$18,200 |
| 16% | $18,201-$45,000 | $18,201-$45,000 | |
| 19% | $18,201-$45,000 | $18,201-$45,000 | |
| 30% | $45,001-$200,000 | $45,001-$135,000 | |
| 32.5% | $45,001-$120,000 | ||
| 37% | $120,000-$180,000 | $135,001-$190,000 |
Questions?
If you have any queries about these changes and how they might impact you or your business, please don’t hesitate to reach out to us anytime. We’re here to help you navigate through these updates!
Feel free to give us a call if you need clarification or guidance. Let’s stay informed and make the most of these changes together!
Keep cool, and talk soon! 🤙
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Versa Advisory – Accountants in Melbourne
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