The Cost of Living Tax Cut Bill 2024 was passed on the 5th of March 2024 to change the individual income tax rates from 1 July 2024.
This bill now supersedes the individual stage 3 tax cuts that were legislated in 2019 and set to apply from 1 July 2024.
While both the cost of living and stage 3 tax rates see individuals paying less tax in the 2025 financial year, compared to the 2024 financial year, individuals with an annual income greater than $146,493 will receive less of a tax benefit under the cost of living tax rates.
A comparison of the 2024-25 financial year tax savings to the 2023-2024 financial year under the previous and new tax rates is summarised below:
| Annual Income |
2025 Tax Cut - 2019 Legislated Stage 3 Rate |
2025 Tax Cut - Newly Legislated 2024 Cost of Living Rate |
Difference |
| $45,000 |
- |
$804 |
$804 |
| $75,000 |
$750 |
$1,554 |
$804 |
| $100,000 |
$1,375 |
$2,179 |
$804 |
| $146,500 |
$3,730 |
$3,729 |
($1) |
| $150,000 |
$3,975 |
$3,729 |
($246) |
| $185,000 |
$6,825 |
$4,129 |
($2,696) |
| $200,000 |
$9,075 |
$4,529 |
($4,546) |
The changes to the resident individual tax rates and thresholds are summarised in the tables below:
2023 – 2024 Tax Rates – Current Rates
| Thresholds |
Tax rates |
Tax payable |
| $0 – $18,200 |
Tax-free |
Nil |
| $18,201 – $45,000 |
19% |
19c for each $1 over $18,200 |
| $45,001 – $120,000 |
32.5% |
$5,092 plus 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 |
37% |
$29,467 plus 37c for each $1 over $120,000 |
| $180,000 and over |
45% |
$51,667 plus 45c for each $1 over $180,000 |
2024 – 2025 Tax Rate – 2019 Stage 3 Rate
| Thresholds |
Tax rates |
Tax payable |
| $0 – $18,200 |
Tax-free |
Nil |
| $18,201 – $45,000 |
19% |
19c for each $1 over $18,200 |
| $45,001 – $200,000 |
30% |
$5,092 plus 30c for each $1 over $45,000 |
| $200,000 and over |
45% |
$51,592 plus 45c for each $1 over $200,000 |
2024 – 2025 Tax Rate – 2024 Cost of Living Rate
| Thresholds |
Tax rates |
Tax payable |
| $0 – $18,200 |
Tax-free |
Nil |
| $18,201 – $45,000 |
16% |
16c for each $1 over $18,200 |
| $45,001 – $135,000 |
30% |
$4,288 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 |
37% |
$31,288 plus 37c for each $1 over $135,000 |
| $190,000 and over |
45% |
$51,638 plus 45c for each $1 over $190,000 |
Don't hesitate to get in touch with your Ulton advisor if you have any questions about your tax planning for 2024 and future financial years.
Sources
Cost of living – tax rates
https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r7140
Stage 3 – tax rate
https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6345#:~:text=Amends%20the%3A%20Income%20Tax%20Assessment,%24700%20from%20the%202022%2D23
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