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  • Writer's pictureMichelle Cozzi

Updated Stage 3 Tax Cuts

The Federal Government announced that they will amend the legislated Stage 3 Tax Cuts that are scheduled to begin on 1 July 2024.

 

Why? They decided to redistribute some of the planned tax savings for higher income earners to lower income earners, to assist them with cost-of-living pressures.

 

SUMMARY OF THE CHANGES

 

These are the planned changes to tax rates for 2025:

 

Current Tax Rates

Original Stage 3 Tax Cuts

Redesigned Stage 3 Tax Cuts

2024 Income

2024

Tax Rate

2025 Income

2025

Tax Rate

2025 Income

2025

Tax Rate

$0 - $18,200

0%

$0 - $18,200

0%

$0 - $18,200

0%

$18,201 - $45,000

19%

$18,201 - $45,000

19%

$18,201 - $45,000

16%

$45,001 - $120,000

32.5%

$45,001 - $200,000

30%

$45,001 - $135,000

30%

$120,001 - $180,000

37%

$135,001 - $190,000

37%

>$180,000

45%

>$200,000

45%

>$190,000

45%

 

As a result of these changes:

 

  • High income earners earning $200,000 will have their proposed tax saving slashed from $9,075 to $4,529.

  • Individuals earning under $45,000 and not eligible for the original State 3 Tax Cuts will now benefit, with a tax rate of 16% being reduced from 19% - which is worth a maximum of $804 for someone earning $45,000 or above.

  • An individual earning $90,000 will receive a tax cut of $1,929 – up from $1,125 under the original Stage 3 Tax Cuts.

  • While the original Stage 3 Tax Cuts have been legislated, the updated Stage 3 Tax Cuts still need to be agreed to by Federal Parliament.



REDUCING YOUR TAX + PLANNING FOR YOUR TAX PAYMENTS

 

Here is the order of the key tax planning services we recommend for you over the coming months:

 

In May 2024 we’ll consider strategies to reduce your tax after the Federal Budget.

 

In May/June 2024, we can provide you with a Tax Planning Report that will give you specific actions to reduce your tax, including the best way to spread business profits across family members to provide for their needs.

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