Yahoo News Stage-three tax cuts: how the Albanese government’s changes will affect you
Australians earning less than $150,000 are set to benefit from changes to the stage-three tax cuts package from July, after federal cabinet approved plans to change the tax code. This includes those earning less than $45,000, who were set to miss out under the stage-three tax cuts legislated under the previous Coalition government.
Those earning between $50,000 and $130,000 will see the biggest benefit from the reported changes, according to modelling by Assoc Prof Ben Phillips at the Australian National University. Those earning above $150,000 will see a smaller tax cut than they otherwise would have. Australians earning less than $45,000 were not set to get a tax cut in July but now will.
The changes to the tax code, which still need to pass parliament, include reinstating the 37% tax bracket that was set to be abolished, lowering the rate for the bottom tax bracket to 16%, and lowering the threshold for the top tax rate to $190,000.
The changes to stage-three tax cuts explained
All Australians will get a tax cut, but for many on higher incomes it will be a smaller tax cut than they were expecting.
The Morrison government’s stage-three tax cuts passed parliament in 2019, and Labor committed to keep them in the last election. This removed the 37% tax bracket for those earning between $120,000 and 180,000, increased the top tax bracket from $180,000 to $200,000, and lowered the 32.5% marginal tax rate to 30%.
The stage-three tax cuts predominantly benefited those on higher incomes. But the changes passed by the federal cabinet will see the distribution change, with households on middle incomes the biggest beneficiaries according to ANU modelling.
Middle and high middle income households – with average annual incomes of $97,000 and 136,000 respectively – will get the largest average gains at tax time.
How much will I save?
You can explore how the changes will affect you in the table below. The columns include the legislated stage-three tax cuts, and the proposed changes that have been reported.
