Stage Three Tax Cuts Australia – How Will You Benefit?

To help ease the cost of living burden on middle Australia, the Albanese government announced tax cut revisions that will affect 13.6 million Australian taxpayers, starting 1st July 2024. 

Our Melbourne financial advisors have put together this 2024 tax cuts overview so you can understand the new tax brackets and how they will impact you. We can also advise on the best ways to make these savings work hard for you. So, if, like us, you see an opportunity for your savings to deliver even greater financial rewards, speak to our team today. 

Stage Three Tax Cuts Australia – Who Benefits?

In a nutshell, we’re all going home with more money in our pockets. We’ll detail just how much further down this article. If you don’t begin to see a small increase in your paycheck after 1st July 2024, make an inquiry with your employer.  

But remember – these cost of living pressure cuts have no bearing on your 2023/24 tax return.

Original Stage Three Tax Cuts Now Scrapped 

To avoid confusion, it’s worth remembering that the original plans looked quite different and appeared to favour Australia’s financial elite. The plans would have seen a single tax bracket of 30% applied to those earning between $45K and $200K and a retention of 45% for those earning over $200K. 

The changes were first tabled in 2018 when none of us anticipated what lay ahead. A global pandemic, steep interest rate rises, high inflation, and a cost-of-living crisis have hit Australians hard, compelling the government to make additional revisions. 

The latest updates are set to distribute tax savings more evenly and level out the playing field rather than favouring those on high incomes. Let’s find out more about this now. 

The Latest Tax Cuts for 2024

The new-look round of changes includes the following take-home points:

• 19% tax rate reduced to 16%, meaning those on salaries up to $45K stand to save $804pa. 
• 32.5% tax rate reduced to 30% for incomes between $45K – $135K.
• 37% tax rate remains, but the threshold rises to $135K.
• 45% tax rate remains, but the threshold rises to $190K. 

For high-income Australians, this new package will increase the benefit for those on $200k by $4,546 instead of $9,075, as per the original plans.

New Stage 3 Tax Cuts Table

Refer to the below for a quick-glance understanding of how Australian tax cuts will differ in 2024/25 compared to the previous financial year. 

How Much Will You Save Every Month?

Discover how recent tax changes could boost your monthly income! This chart shows the approximate increase in monthly income across different gross income levels.

But how does this translate to your specific circumstances? This handy table shows how much more money you can expect to have in your pocket each month. 

Medicare Levy Changes 2024

The Medicare levy is presently 2% of your taxable income. However, this surcharge is not payable by low-income Australians. It remains unchanged for those earning less than $26K. For anyone earning above this threshold, the Medicare levy kicks in gradually until the full 2% is charged to those earning over $32.5K.

Contact Us About Wealth Growing Strategies

“Give a man a fish, and you feed him for a day; teach a man to fish and you feed him for a lifetime.”

This proverb comes to mind when we consider the tax cuts and what to do with them. We see two options: Either you use the money immediately on everyday expenses (so you take the fish), or you put those savings towards broader wealth-growing strategies (you learn to fish). 

Our financial advisors in Melbourne might not know their way around a fishing line, but they can certainly advise on the best wealth-growing strategies for you. Make these savings count in ways you would never have imagined – contact our team for a no-cost, no-obligation call.