Pay InvoiceTax Planning Sessions

Stage 3 Tax Cut Changes Announced – How Does It Affect Your Tax Return?

As a taxpayer, nothing else can be more exciting than the idea of paying less taxes. Lower taxes mean you get to keep more money in your pocket. 

So here is good news for you: starting in July, you will be paying less taxes. From July onwards, Australians with incomes of up to $150,000 are anticipated to receive a more substantial financial boost as part of the revised stage 3 tax cuts plan by the government.

The discussion surrounding Stage 3 tax cuts has been ongoing since their announcement in 2018. These tax cuts were aimed to provide relief from the ‘bracket creep’ (increased tax liability resulting from a rise in income) while making the tax system a bit simpler. 

Stage 3 Tax Cut

What Are The Stage 3 Tax Cuts?

In simpler terms, the previous Australian government made adjustments to how much income tax individuals pay based on their earnings. The impact of stage 3 tax cuts is primarily on those with higher incomes, as they will experience a reduction in their tax burden.

This marks the final phase of a three-part plan implemented by the Australian government, aiming to lower tax rates for individuals in the middle and higher income brackets. The recent tax cuts involve modifications to income ranges and tax rates within the marginal tax brackets. 

Changes to these brackets have already occurred in the 2018-19 and 2019-20 financial years, with additional adjustments set to take effect on July 1, 2024.

What Are The New Stage 3 Tax Cut Brackets?

The Prime Minister made a significant announcement regarding changes to the Stage 3 tax cuts in his address to the National Press Club today. The key modifications include:

  • Reducing the 19% tax rate to 16% for incomes between $18,200 and $45,000. 
  • Reducing the 32.5% tax rate to 30% for incomes between $45,000 and the new $135,000 threshold. 
  • Increasing the threshold for the 37% tax rate from $120,000 to $135,000. 
  • Increasing the threshold for the 45% tax rate from $180,000 to $190,000.

Pending the passage of amending legislation, these changes are set to take effect from July 1, 2024. If implemented, the new Australian resident personal income tax rates would be as follows:

Stage 3 Tax Cut Brackets

In summary, Australia’s stage 3 tax cuts, effective from July 1, 2024, bring notable changes to income tax. These changes include reducing the 19% tax rate to 16% for $18,200-$45,000 incomes, lowering the 32.5% rate to 30% for $45,000-$135,000 and adjusting thresholds for the 37% and 45% rates. 

Pending legislation, these modifications seek to simplify the tax system and provide significant financial relief for individuals.


Disclaimer: This website is designed for informational and educational purposes. Although we exert diligent efforts to maintain the accuracy and reliability of the content, we must disclaim liability for any errors, omissions, or inaccuracies. The content provided is “as is” and is not accompanied by warranties, whether expressed or implied. It should not serve as the sole basis for financial or legal decisions.

Given the evolving nature of financial regulations and conditions, the accuracy and reliability of information may change over time. Users are urged to exercise due diligence and consult with a qualified financial professional for personalized advice. ‘Clear Tax Accountants’ bears no responsibility for direct or indirect consequences, encompassing financial loss or legal matters stemming from the use or misuse of the information on this website.

Please be aware that the information, by no means, is a substitute for financial advice.