Stage Thee Tax Cuts
Stage three tax cuts will be implemented from 1st July 2024 (2025FY).
The goal of introducing this tax cut is to prevent 'bracket creep' and ease the financial strain on Australian taxpayers.
Bracket creep is a situation where income growth causes individuals to pay higher average income tax rates each year.
What will change?
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.
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?
Low income tax offset (LITO)
LITO will still be applied to your future tax returns.
**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.
However, the stage three tax cuts will bring considerable reductions in tax liabilities to middle income earners for the 2025FY.
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