Government makes changes to Stage 3 tax cuts

Varun Kumar

25 January 2024

The Prime Minister, Anthony Albanese, announced today that the Government will be amending the previously legislated Stage 3 tax cuts, which commence from 1 July 2024. The following is a summary of the previously legislated tax cuts, which will not be going ahead:

Resident Tax Rates not including 2% Medicare Levy
	Current tax rates	Currently legislated – Stage 3
Rate	Taxable income up to 30 June 2024	Taxable income from 1 July 2024
0%	$0 - $18,200	$0 - $18,200
19%	$18,201 - $45,000	$18,201 - $45,000
30%	N/A	$45,001 - $200,000
32.5%	$45,001 - $120,000	N/A
37%	$120,001 - $180,000	N/A
45%	$180,001 and over	$200,001 and over

With the announcement made today, the tax cuts above have been scrapped.

Tax rates going forward

The amended tax cuts are targeted towards lower to middle income earners as well as giving higher income earners tax cuts (whilst lower than initially legislated).

The summary of new tax cuts are as follows:

Lowering the lowest marginal tax rate from 19% to 16%.
Reducing the 32.5% marginal tax rate to 30% targeting individuals earning between $45,000 - $135,000.
Reinstating the 37% marginal tax rate which was going to be scrapped from 1 July 2024.
The 45% marginal tax rate will apply to income earners with taxable income exceeding $190,000.
Increasing the low-income threshold for Medicare levy purposes.

Resident Tax Rates not including 2% Medicare Levy
	Current tax rates	Government’s amended– Stage 3
Rate	Taxable income up to 30 June 2024	Taxable income from 1 July 2024
0%	$0 - $18,200	0 - $18,200
19%	$18,201 - $45,000	N/A
16%	N/A	$18,201 - $45,000
30%	N/A	$45,001 - $135,000
32.5%	$45,001 - $120,000	N/A
37%	$120,001 - $180,000	$135,001 – $190,000
45%	$180,001 and over	$190,001 and over

If you have any queries in relation to this, contact your Moore Australia adviser for further information.