Following recent developments, the Federal Government's modifications to the Stage 3 Tax Cuts have officially become law as of last night, effective from 1 July 2024. Here's the updated information you need to know:
Summary of the Legislative Changes
Below is a comparison of the tax rates for 2025, showing the transition from current rates through to the now legislated Redesigned Stage 3 Tax Cuts:
Rate | 2023-24 | 2024-25 |
Nil | $0 - $18,200 | $0 - $18,200 |
16% | N/A | $18,201 - $45,000 |
19% | $18,201 - $45,000 | N/A |
30% | N/A | $45,001 - $135,000 |
32.5% | $45,001 - $135,000 | N/A |
37% | $120,001 - $180,000 | $135,000 - $190,000 |
45% | $180,001 + | $190,000 + |
Key Highlights:
High earners with an income of $200,000 will now see their tax savings decrease from $9,075 to $4,529 under the newly legislated cuts.
Individuals earning below $45,000, who were previously not eligible for the Stage 3 Tax Cuts, will benefit from a reduced tax rate of 16% (down from 19%), providing up to $804 in savings for someone at the $45,000 threshold.
An individual with a $90,000 income will enjoy a tax cut of $1,929, up from the original Stage 3 cut of $1,125.
Tax Planning Advice - Maximizing Your Benefits
With these tax changes now officially law, it's crucial to consider how they might affect your tax planning. By estimating your 2024 income and tax obligations for each member of your family group, we can devise strategies to distribute your income in the most tax-efficient manner, ensuring you legally pay the least amount of tax.
A potential strategy to consider is deferring income to the 2025 fiscal year to benefit from the legislated Stage 3 Tax Cuts.
Embrace these new tax planning opportunities and potentially achieve significant savings on your future tax bills. Let's discuss how you can personally benefit from these legislative changes.