Personal tax rate cuts

The Government has announced further reductions in personal income tax, building on changes announced in the 2018/19 Federal budget.

It is proposed that from 1 July 2022, the top income level for the 19% personal income tax bracket will increase from the previously legislated $41,000 to $45,000.

Further, from 1 July 2024 the 32.5% personal income tax bracket will be reduced to 30%. The proposed personal income tax rates up to the year 2024/25 are outlined below:

Rate  Thresholds 2018/19 to 2021/22 Thresholds 2022/23 to 2023/24 Thresholds 2024/25
Nil Up to $18,200 Up to $18,200 Up to $18,200
19% $18,201 – $37,000 $18,201 – $45,000 $18,201 – $45,000
30% $45,001 – $200,000
32.5% $37,001 – $90,000 $45,001 – $120,000
37% $90,001 – $180,000 $120,001 – $180,000
45% Above $180,000 Above $180,000 Above $200,000

 

Low and middle income tax offset (LMITO)

The low and middle income tax offset (LMITO) will provide further reductions in tax.

The reduction in tax it provides will increase from a maximum amount of $530 to $1,080 per annum, and the base will increase from $200 to $255 per annum for the 2018/19 to 2021/22 income years.

Income Offset
up to $37,000 $255
$37,001 to $48,000 $255 plus 7.5 cents for each dollar over $37,000
$48,001 to $90,000 $1,080
$90,001 to $126,000 $1,080 less 3 cents for each dollar over $90,000

 

Low income tax offset (LITO)

From 1 July 2022, the Government will increase the low income tax offset (LITO) from $645 to $700. The increased LITO will be withdrawn at a rate of:

  • 5 cents per dollar between taxable incomes of $37,500 and $45,000, then;
  • 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

 

Helping with power bills

The government will provide $284M for a one-off, income tax exempt payment to over 3.9m Australians, to assist with their power bills and cost of living expenses. The payment of $75 for singles and $125 for couples will be made to those eligible for certain social security payments.

 

Increasing the Medicare levy low-income thresholds

The Government is set to increase the Medicare levy low-income thresholds for singles, families, and seniors and pensioners for the 2018-19 income year. These increases are to accommodate for recent changes in the Consumer Price Index so that low-income taxpayers continue to be exempt from paying Medicare Levy.

The changes are:

Medicare Levy low-income threshold changes
 2017-18 ($) 2018-19 ($)
Singles 21,980 22,398
Families 37,089 37,794
Families- Increase for each Dependent child or student 3,406 3,471
Single Seniors & Pensioners 34,758 35,418
Family Seniors & Pensioners 48,385 49,304

< Back