Navigating the Road to Stage 3 Tax Cuts

Time to start Tax Minimisation Planning!

The long-anticipated stage 3 tax cuts, greenlit in 2018 and set to unfold in the 2024/25 income year, are finally upon us, however not without some last-minute tweaks by the Labour Government.

Now is the opportune moment to navigate these changes, embracing the potential tax savings.

The Stage 3 tax cuts will roll out on July 1, 2024. This article explains the adjustments in personal income tax rates and thresholds and unpacks key strategies and practical avenues for tax savings, particularly for those in higher-income brackets.

Key Changes in Tax Rates based on the latest Labour announcement:

1. • Tax rate for those between the $18,200 tax-free threshold and $45,000 will be lowered from 19% to 16%
   • Tax rate for taxable income between $45,000 and $135,000 will decrease from 32.5% to 30%.
   • Tax rate for income between $135,000 and $190,000 will be reinstated to 37%.
   • Those earning over $190,000 will continue to pay the 45% tax rate.
   • Note that these figures exclude the Medicare levy of 2%.

Comparison of taxable incomes before and after Stage 3 tax cuts

New Proposed Tax Rates for 2025 (Stage 3 tax cuts)

Tax Liability

The table below provides a guide to what taxpayers can expect to pay and save based on the Stage 3 tax cuts.

Key Assumptions

1. The income is the taxpayers assessable income, net of any deductions.
2. This model does not account for the Medicare Levy, Medicare Levy Surcharge or other tax offsets the taxpayer may be eligible to receive.
3. This model does not account for any HELP loan repayments the taxpayer may be required to make (if any).
4. Taxpayer is an Australian tax resident in both income years.
5. All numbers are rounded to the nearest dollar.

How Morrows Can Help – Strategic Tax Planning Session

Considering the stage 3 tax cuts, it’s crucial to plan ahead and explore opportunities to bring forward deductions, optimising your tax position. To ensure a well-considered approach to maximise your income and minimise your tax bill, we invite you to schedule a meeting with your advisor sooner rather than later. This will give us enough time to discuss, plan and execute your personalised strategies aligned with the upcoming tax changes.

Want to learn more Tax Minimisation Strategies? Download our Tax Minimisation Guides

Our advisors have prepared two 2024 Tax Minimisation guides. These guides outline the various strategies we can consider helping reduce your personal or business tax bill this financial year. Fill in your details below, to gain access to these guides for free.