The good news is that if you earn over $45,000, you’re going to get a pay rise from 1 July 2024 in your tax return! How much, depends on how much you earn.
The tax rate between $45,000 and $120,00 has dropped 2.5% from 32.5% to 30%.
The tax rate between $120,000 and $180,000 has dropped 7% from 37% to 30%.
The tax rate between $180,000 and $200,000 has dropped 15% from 45% to 30%.
That’s over $9k back in your pocket in tax savings if you earn $200,000.
Importantly though, a lot of Aussies benefit from these tax reductions. The largest percentage of Aussies earn between $45,000 and $200,000.
We didn’t see any change to the tax-free threshold in this budget, but let’s hope there are more changes to come for low-income earners. These tax cuts were part of the previous Government’s personal income tax reform which has the benefit of both simplifying the tax thresholds in Australia and reducing tax payable by middle Australia.
Resident tax rates and threshold
|Current From 1 July 2023||From 1 July 2024|
|Taxable income||Tax payable||Taxable income||Tax payable|
|$0 – $18,200||Nil||$0 – $18,200||Nil|
|$18,201 – $45,000||19%||$18,201 – $45,000||19%|
|$45,001 – $120,000||$5,092 + 32.5%||$45,001 – $200,000||$5,092 + 30%|
|$120,001 – $180,000||$29,467 + 37%||Income band removed|
|$180,001+||$51,667 + 45%||$200,001+||$51,592 + 45%|
Tax thresholds have always been a part of the tax system in Australia. There has been talk for years about simplifying how the tax thresholds work and this change is a big step in that direction.
The tax free threshold remains at $18,200 from 1 July 2024 with the first band of 19% remaining in place for those earning up to $45,000. Although there was no support in this budget with an increase to the tax free threshold or the first tax backet, its not an election year, so maybe that is to come in future budgets.
For now at least it is getting easier to work out how much you’re getting taxed.
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