Changes to Individual income tax rates and thresholds from 1 July 2024

The government announced changes to Individual income tax rates and thresholds from 1 July 2024 for the 2024–25 financial year. These changes are now law.

Some of the key implications of the changes to the legislated Stage 3 tax plan are as follows:

• The marginal tax rate will be reduced from 19 per cent to 16 per cent for taxpayers with taxable incomes between $18,201 and $45,000.

• The upper income threshold for the 30 per cent tax bracket will be reduced from $200,000 to $135,000.

• The current (i.e. up to 2023–24) marginal tax rate of 37 per cent for taxpayers with taxable incomes between $135,001 and $180,000 will be retained.

• The marginal tax rate for taxpayers with taxable incomes between $180,001 and $190,000 will increase from 30 per cent to 37 per cent.

• The marginal tax rate for taxpayers with taxable incomes between $190,001 and $200,000 will increase from 30 per cent to 45 per cent.

There will be no change to the tax-free threshold of $18,200 or the top marginal tax rate of 45 per cent for taxpayers with taxable incomes over $200,000.

All taxpayers will receive a tax cut compared to 2023–24 but taxpayers with taxable incomes of approximately $147,000 and higher will receive a lower tax cut under the changes as compared to the formerly legislated tax rates.