Years after their initial announcement and months after a significant rework the Stage 3 tax cuts are finally coming into effect from July 01, 2024. Unlike other tax cuts, these won’t hit your bank account in one lump sum after you’ve done your tax return. Instead, you’ll start benefiting from the moment you receive your first pay slip in July.
How Will I Receive My Stage 3 Tax Cuts?
There’s a common misconception that Stage 3 tax cuts will result in a bigger tax return at the end of each financial year. Unlike the recently ended low- and middle-income tax offset, the Stage 3 tax cuts work differently. By changing Australia’s tax brackets, these cuts reduce the amount of tax everyone pays on their income.
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Stage 3 Tax Cuts Table
| 1 | $0 – 18,200 | 0% | $0 – 18,200 | 0% |
|---|---|---|---|---|
| 2 | $18,201–45,000 | 19% | $18,201-45,000 | 16% |
| 3 | $45,001-120,000 | 32.5% | $45,001-135,000 | 30% |
| 4 | $120,001-180,000 | 37% | $135,001-190,000 | 37% |
| 5 | $180,000+ | 45% | $190,000+ | 45% |
For most taxpayers, this means instead of getting a large tax return once a year, you’ll lose less of your income to the tax man and get to take home more of your pay each week, fortnight, or month. Essentially, it’s a pay rise you didn’t have to ask for.
How Much of a Tax Cut Will I Get?
According to the government, the average tax cut will be $1888 per year, which is about $36 per week. However, the exact amount will vary depending on your income.
Income of $18,000: No tax cut, as no one pays tax on the first $18,200 they earn.
Minimum Wage ($47,626): An $870 cut over the year, or just under $16.70 per week.
Income of $100,000: An extra $42 to spend or save every week.
Income of $190,000: An extra $87 each week, or $4529 per year.
| $25,000 | $204 | $3.92 | $17.00 |
|---|---|---|---|
| $40,000 | $654 | $12.58 | $54.50 |
| $60,000 | $1,179 | $22.67 | $98.25 |
| $80,000 | $1,679 | $32.29 | $139.92 |
| $100,000 | $2,179 | $41.90 | $181.58 |
| $120,000 | $2,679 | $51.52 | $223.25 |
| $150,000 | $3,729 | $71.71 | $310.75 |
| $190,000+ | $4,529 | $87.10 | $377.42 |
These estimates are based on federal government data. Your exact tax cut could vary due to tax offsets, the Medicare levy, and other financial circumstances.
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Important Note
The information provided here is general in nature and does not constitute personal financial advice. It has been prepared without considering your personal objectives, financial situation, or needs. Before acting on any information, you should consider the appropriateness of the information in relation to your objectives, financial situation, and needs.
