Government Announces Changes To Proposed Stage 3 Tax Cuts
Despite previous assurances, after much speculation, the Government has announced tweaks to the Stage 3 tax cuts that will apply from 1 July 2024.
In the accompanying press release, the Government stated that it had “found a more responsible way to ensure more people get a bigger tax cut to help ease the pressure they are under.”
In order to achieve this objective, the changes will:
– Reduce the 19% tax rate to 16%;
– Reduce the 32.5% tax rate to 30% for incomes between $45,000 and a new $135,000 threshold;
– Increase the threshold at which the 37% tax rate applies from $120,000 to $135,000; and
– Increase the threshold at which the 45% tax rate applies from $180,000 to $190,000. The proposed tax rates are summarised in the below table:
| 2025 Taxable Income | Proposed Tax Rate |
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001 and over | 45% |
The Government also noted in the press release that the Medicare levy low-income thresholds for the 2024 income year will be increased.
We have also prepared another table (below) to illustrate the differences in the tax payable under the revised State 3 rates as compared with the tax payable under the original Stage 3 tax cuts.
| 2025 Taxable Income | Tax Payable at Original Stage 3 Rates | Tax Payable at Revised Stage 3 Rates | Difference in Tax Payable |
| $10,000 | $0 | $0 | $0 |
| $20,000 | $342 | $288 | -$54 |
| $30,000 | $2,242 | $1,888 | -$354 |
| $40,000 | $4,142 | $3,488 | -$654 |
| $50,000 | $6,592 | $5,788 | -$804 |
| $60,000 | $9,592 | $8,788 | -$804 |
| $70,000 | $12,592 | $11,788 | -$804 |
| $80,000 | $15,592 | $14,788 | -$804 |
| $90,000 | $18,592 | $17,788 | -$804 |
| $100,000 | $21,592 | $20,788 | -$804 |
| $110,000 | $24,592 | $23,788 | -$804 |
| $120,000 | $27,592 | $26,788 | -$804 |
