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:
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 |
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 |
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