Tax cuts across the board

$144 billion in tax cuts promised in this year’s Federal Budget have been passed by both houses of parliament without change.

All Australian taxpayers will benefit from the cuts, but it will be more than six years before the package is rolled out in full.

The package is being introduced in three stages:

From 1 July 2018

• A new tax offset for low and middle-income earners worth up to $530 a year for the next four years
• The threshold for the 32.5% marginal tax rate rises from $87,000 to $90,000

Taxpayers will receive the tax offset when they lodge their Income Tax Returns for the 2018/19 year and onwards.

From 1 July 2022

• The current tax offset for low-income earners will rise from $445 to $645
• The threshold for the 19% marginal tax rate will rise from $37,000 to $41,000
• The 32.5% threshold will rise from $90,000 to $120,000

From 1 July 2024

• The 37% tax bracket will be removed entirely – the government says 94% of all taxpayers will pay tax at a marginal rate of no more than 32.5%
• The 32.5% threshold will rise again, from $120,000 to $200,000

According to the ATO’s tax calculator, a taxpayer with an income of $60,000 per annum will pay $530 less in tax in 2018/19, rising to $540 in 2024/25 onwards.

A taxpayer on $100,000 will be better off by $515 in 2018/19, and pay $1,125 less in tax from 2024/25 onwards.

You can calculate how much tax you’ll save at https://www.budget.gov.au