How much tax will be reduced by the stage three tax cuts?

Stage Thee Tax Cuts

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Stage three tax cuts will be implemented from 1st July 2024 (2025FY). 

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The goal of introducing this tax cut is to prevent 'bracket creep' and ease the financial strain on Australian taxpayers. 

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Bracket creep is a situation where income growth causes individuals to pay higher average income tax rates each year.

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What will change?

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The range and rate of each tax bracket will be revised. There will be a tax cut for every Australian taxpayer. Refer to the comparison of the resident tax rates 2024FY and 2025FY.

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The reduction in tax payable will be determined based on the income levels outlined below. 

These cuts seem to disproportionately favor individuals with lower and middle incomes, providing them with a more significant reduction compared to high-income earners.

‍What are the tax offsets available for 2025FY?‍

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Low income tax offset (LITO) 

LITO will still be applied to your future tax returns.

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**Low and Middle Income Tax Offset (LMITO) is no longer available from 2023FY. This offset previously provided a tax reduction of up to $1500 for individuals earning less than $126,000. 

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However, the stage three tax cuts will bring considerable reductions in tax liabilities to middle income earners for the 2025FY. 

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CTK Accounting is a full-scope accounting firm based in Wollongong, servicing clients nationally.

For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au

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