As we usher in the 2024-25 financial year, a suite of new rules and regulations comes into effect, impacting millions of Australians. Among the most significant changes are the adjustments to the country’s tax brackets, a result of the “Stage Three Tax Cuts” passed in February.
New Tax Brackets for 2024-25
The Australian government has restructured its tax brackets, resulting in a slight reduction in the amount of tax for approximately 13.6 million Australians. This change will be reflected in their next pay cheque, though it won’t affect tax returns this year, as it applies to taxable income earned from today onwards.
Here is a summary of the new tax brackets:
- Income up to $18,200: No tax
- Income between $18,201 and $45,000: 16% tax rate
- Income between $45,001 and $135,000: 30% tax rate
- Income between $135,001 and $190,000: 37% tax rate
- Income above $190,000: 45% tax rate
These adjustments are part of a broader strategy aimed at reducing the tax burden on middle-income earners while maintaining a progressive tax system. The Stage Three Tax Cuts have been in the pipeline for some time, with the goal of simplifying the tax structure and providing relief to a significant portion of the working population.
Impact on Australian Taxpayers
The new tax brackets mean that Australians across various income levels will see changes in their tax obligations. Those earning between $45,001 and $135,000 will particularly benefit from the 30% tax rate, a reduction from the previous higher rates in this income range. High-income earners, those making above $190,000, will continue to pay the top tax rate of 45%.
To help Australians understand how these changes affect them, a tax calculator has been made available, allowing individuals to see how much they will save under the new tax structure.
Looking Ahead
The introduction of these new tax brackets marks a significant shift in the Australian tax landscape. As the financial year progresses, taxpayers will begin to feel the impact of these changes, with many seeing a modest increase in their take-home pay. The government hopes that these adjustments will not only provide financial relief but also stimulate economic activity by putting more money in the pockets of consumers. As with any tax changes, it is advisable for Australians to review their financial plans and consult with tax professionals to fully understand how the new brackets will affect their individual situations.
Source:
https://www.abc.net.au/news/2024-07-01/audience-law-changes-coming-into-effect-on-july-1/104034320
