From 1 July 2024, all Australians will pay less income tax. The tax cuts will;
- reduce the 19 per cent tax rate to 16 per cent
- reduce the 32.5 per cent tax rate to 30 per cent
- increase the threshold above which the 37 per cent tax rate applies from $120,000 to $135,000
- increase the threshold above which the 45 per cent tax rate applies from $180,000 to $190,000
How do income tax rates and thresholds work?
New individual income tax rates and thresholds will come into effect from 1 July 2024. If you are an Australian taxpayer, you are entitled to the tax-free threshold of $18,200. This means you can earn up to $18,200 each year without paying tax.
If you earn between $18,201 and $45,000:
- your first $18,200 remains tax free, and
- you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000.
If you earn between $45,001 and $135,000:
- your first $18,200 remains tax free, and
- you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000, plus
- 30 cents tax on every dollar you earn between $45,001 and $135,000.
If you earn between $135,001 and $190,000:
- your first $18,200 remains tax free, and
- you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000, plus
- 30 cents tax on every dollar you earn between $45,001 and $135,000, plus
- 37 cents tax on every dollar you earn between $135,001 and $190,000.
If you earn over $190,000:
- your first $18,200 remains tax free; and
- you will pay 16 cents tax on every dollar you earn between $18,201 and $45,000, plus
- 30 cents tax on every dollar you earn between $45,001 and $135,000, plus
- 37 cents tax on every dollar you earn between $135,001 and $190,000, plus
- 45 cents tax on every dollar you earn above the $190,000 threshold.
Certain taxpayers, such as low-income taxpayers and senior Australians may also be eligible for tax offsets that directly reduce their final tax liability.
For more information on paying tax on your income, visit the Australian Taxation Office website.
