In January 2024, the government announced that it would redesign the Stage Three tax cuts that were initially announced by the former government in 2018. The new rates were designed to provide larger tax cuts to low and middle income earners and reduce the tax cuts for those earning $160,000 or more.
The government’s amended stage three tax cuts have now passed the Senate and will become law. These tax cuts are due to commence 1 July 2024.
Below we set out the current tax rates compared to the new rates commencing from 1 July 2024.
| Current Tax Rates | |
| Taxable income | Tax on taxable income |
| 0 - 18,200 | Nil |
| 18,200 - 45,000 | 19c per $1 over $18,200 |
| 45,001 - 120,000 | $5,092 plus 32.5c for each $1 over $45,000 |
| 180,001 - 180,000 | $29,467 plus 37c for each $1 over $120,000 |
| 180,001 & over | $51,667 plus 45c for each $1 over $180,000 |
| Tax Rates from 1 July 2024 | |
| Taxable income | Tax on taxable income |
| 0 - 18,200 | Nil |
| 18,200 - 45,000 | 16c per $1 over $18,200 |
| 45,001 - 135,000 | $4,288 plus 30c for each $1 over $45,000 |
| 135,001 - 190,000 | $31,288 plus 37c for each $1 over $135,000 |
| 190,001 & over | $51,635 plus 45c for each $1 over $190,000 |
The 19c tax rate will reduce to 16c and the 32.5c tax rate reduce to 30c. In addition, the 30c tax bracket increases from $120,000 to $135,000 and the 37c tax bracket increases to $190,000. This means an increase of $10,000 (from $180,000 to $190,000) before a taxpayer reaches the top marginal tax bracket.
What does this mean for you. Below we set out a table showing the tax savings from 1 July 2024 for various income levels.
| Taxable Income | Tax @ Current Rates | Tax @ New Rates | Saving |
| 30,000 | 2,242 | 1,888 | 354 |
| 50,000 | 6,717 | 5,788 | 929 |
| 80,000 | 16,467 | 14,788 | 1,679 |
| 100,000 | 22,967 | 20,788 | 2,179 |
| 150,000 | 40,567 | 36,838 | 3,729 |
| 180,000 | 51,667 | 47,938 | 3,729 |
| 200,000 | 60,667 | 56,135 | 4,532 |
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