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 The increased LITO will be withdrawn at a rate of: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 |
