fbpx

Rands Tax & Business Consultants

Unpacking the New Stage 3 Tax Cuts

At Rands Tax & Business Consultants, your trusted accountant in Berwick, we're here to simplify these changes and show you how they can impact your take-home pay.

Navigating the latest updates to the Stage 3 tax cuts can bring significant benefits. In a snapshot, it is confirmed that the government’s proposed tax changes come into effect from 1 July 2024. Compared to the original Stage 3 tax cuts, these changes provide relief to low and middle-income earners by lowering the tax withheld from their take-home pay. The result: Australians get more money in their pockets each week.


Key Points:


What's Different About the Stage 3 Tax Cuts in 2024?

The latest changes include adjustments to income ranges and tax rates within marginal tax brackets. Here’s a breakdown:

Stage 3 Tax Cuts 2023 -24

Marginal Tax Rates

Income $18,201 - $45,000

Marginal tax rate reduced from 19% to 16%.

Income $45,001 - $135,000

Marginal tax rate reduced from 32.5% to 30%,. Earlier threshold for 32.5% rate was for 45K to $120,000

Income $135,001 - $190,000

Retains the 37% tax bracket (previously planned to be scrapped).

Income over $190,001

Remains in the 45% tax bracket but benefits from lower rates in other brackets.

Stage 3 Tax Cuts Table

Income Range

2023 - 2024 Tax Rate

2024 - 2025 Tax Rate

$18,201 - $45,000

19%

16%

$45,001 - $135,000

32.5%

30%

$135,001 - $190,000

37%

37%

Over $190,001

45%

45%


Understanding the “2024 Cost of Living Tax Cuts”

These revised Stage 3 tax cuts, sometimes referred to as “cost of living tax cuts”, are designed to provide extra money to more Australians, not just the highest earners. This adjustment helps middle- and high-income earners manage living costs more effectively.


Impact on Australian Workers

The main benefit is an increase in take-home pay.

Example

Median Weekly Salary

$1,400

2023-24 Tax Withheld

$301

Take

$1,099

2024-25 Tax Withheld

$272

New Take Home Pay

$1,128

Weekly Increase

$29

Additional Examples:

Occupation 1

Annual Salary

$70,000

2023-24 Tax

$14,617

2024-25 Tax

$13,188

Weekly Increase

$28.00

Annual Increase

$1,429

Occupation 2

Annual Salary

$100,000

2023-24 Tax

$24,967

2024-25 Tax

$22,788

Weekly Increase

$42.00

Annual Increase

$2,179.00

Occupation 3

Annual Salary

$150,000

2023-24 Tax

$43,567

2024-25 Tax

$39,838

Weekly Increase

$72.00

Annual Increase

$3,729.00


Monthly Income Changes

To visualize how your monthly income will be affected, we've created a graph showing the approximate changes based on the new tax cuts.


Why the Changes?

The original Stage 3 tax cuts were planned before the pandemic and rising living costs. Revised tax cuts aim to provide more immediate relief to lower and middle-income earners, while still adhering to the original goal of a fairer tax system.


Government Funding for the Changes

Details on how the government plans to fund these changes will be outlined in the next Federal budget. The focus is on providing relief to lower and middle-income earners, reducing benefits to those earning over $135,000 per year.

Your 2023/24 tax return, due in July 2024, will not be affected by the new tax cuts. However, starting from July 1, 2024, you should see an increase in your take-home pay. Ensure your employer applies the new tax rate.

For personalized tax preparation in Berwick, reach out to Rands Tax & Business Consultants, the accountant specialized in work-related expenses. We’re here to provide “The Right Solution” for all your tax needs.

Get in touch with us

Recent Posts

Speak to a home loan specialist

Name(Required)
Name