Stage 3 Tax Cuts 2024

What’s changing?

The ‘Stage 3 tax cuts’ were already law and are due to come into effect on 1 July 2024.

The recent amendments to the scheduled tax cuts change some of the personal income tax rates, as well as the income brackets that certain tax rates apply to. The tax-free threshold (which is the amount of income that you can earn before tax is payable), will remain at $18,200.

Compared to the original tax cuts, the changes:

• reduce the 19% tax rate to 16% (a win for anyone earning below $45k a year).

• reinstate the 37% tax bracket (which was going to be removed from 1 July), but increase the income band to which this applies from $120,000 to $135,000, and

• decrease the threshold above which the 45% tax rate applies, from $200,000 to $190,000.

The following table compares the tax rates for the current financial year with both the original Stage 3 tax cuts and the new rates which are now law.

Need more information about how this may affect you and your personal circumstances? Get in touch with us today.