The proposed tax cuts were originally planned to be implemented from 1 July 2022 however with the impacts of COVID-19, the Morrison government has brought forward the changes to 1 July 2020 and the tax rates are as follows:
*1: the above rates do not include 2% Medicare Levy
The above changes will affect mainly the middle income earners. The proposed changes to the tax rates for the 2025 Financial Year onwards have remained unchanged and commence from 1 July 2024 as legislated.
The tax changes from 1 July 2024 will see the abolishing of the 37% personal income tax bracket and the reduction of the 32.5% tax bracket to 30%. Further, the upper threshold for the new 30% bracket will be moved from $120,000 to $200,000. See below:
Over and above the tax rate changes from 1 July 2020, the government are also proposing to bring forward the increase of the Low Income Tax Offset (LITO) from $445 to $700. This change will also take affect from 1 July 2020.
The increased maximum $700 offset will be reduced at a rate of 5c per dollar for taxable incomes between $37,500 and $45,000. Further the LITO will be further reduced at a rate of 1.5c per dollar for taxable incomes between $45,000 and $66,666.
The government have not made any changes to the rate of the Low and Middle Income Tax Offset (LAMITO) however have extended the offset to apply for the 2021 income year as well.
If you would like more information on key measures we have covered follow the link below or visit the Government's Federal Budget page.
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