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Tax cuts to help with the cost of living

The Government has announced it will deliver tax cuts to all Australian taxpayers, to provide cost-of-living relief. 

High-income earners will see a reduction of $4546 in their tax cuts, which were previously believed to be guaranteed for Australians. However, under Labor’s proposed changes to marginal tax rates, middle-income earners stand to gain up to $804.

Tax cuts to help with the cost of living 

The adjustments to the scheduled tax cuts, set to take effect on July 1, involve scaling back some of the planned reductions for individuals earning between $135,000 and $200,000 annually. Additionally, the bottom marginal tax rate will be lowered from 19 per cent to 16 per cent.

According to analysis conducted by The Tax Institute on the proposed modifications to stage three tax cuts, those earning $200,000 and above will now receive a tax reduction of $4529 instead of the initially proposed $9075.

Workers earning $130,000 will experience a tax cut of $3379, representing an $804 improvement over the initially projected $2575 reduction. Furthermore, individuals earning $40,000, who were initially slated to receive no tax reduction, will now benefit from a $654 cut.

Summary of proposed changes 

2023-24 2024-25
Thresholds ($) Rates (%) Thresholds ($) Rates (%)
0 – 18,200 Tax free 0 – 18,200 Tax free
18,201 – 45,000 19 18,201 – 45,000 16
45,001 – 120,000 32.5 45,001 – 135,000 30
120,001 – 180,000 37 135,001 – 190,000 37
Over 180,000 45 Over 190,000 45

Legislation will be introduced to enact these changes.

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general advice disclaimer

The information provided on this website is a brief overview and does not constitute any type of advice. We endeavour to ensure that the information provided is accurate however information may become outdated as legislation, policies, regulations, and other considerations constantly change. Individuals must not rely on this information to make a financial, investment or legal decision. Please consult with an appropriate professional before making any decision.

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