Prime Minister Anthony Albanese has revealed the proposed changes to the stage 3 tax cuts, promising that his government will deliver “a tax cut for every single Australian taxpayer”.
Under the changes, the second tax bracket will be cut from 32.5 per cent to 30 per cent, applying up until someone earns $135,000.
Previously the second tax bracket only extended until a taxpayer earned $120,000.
The threshold for the top tax rate of 45 per cent will be increased to $190,000, up from $180,000.
The changes will take place, as previously scheduled, on July 1.
Albanese said the changes will mean the average Australian will receive a tax cut of more than $1500 a year.
“The average wage in Australia is $73,000. A person earning that will now get a tax cut of more than $1500 a year,” he said.
“More than double what they would have gone under the plan put forward by Scott Morrison.
“Consider a full-time worker earning $100,000 a year, they will get a tax cut of over $2100.”
Additionally, the lowest rate of income tax at 19 cents on the dollar will be reduced to 16 cents on the dollar, resulting in all taxpayers earning less than $45,000 receiving a tax cut.
“For a family on the average household income which is around $130,000 with one partner earning 80000 and the other 50,000, their combined tax cut will be over $2600,” he said.
“This is more than $101,600. More than they would have gone under the old plan.
“And someone earning over $190,000, such as politicians, will still get a substantial tax cut of over $4500.”
What do the redesigned tax cuts mean for you?
The vast majority of Australian taxpayers will receive a larger tax cut under the Albanese government’s redesigned scheme.
Take for example Australians earning $40,000. Under the old stage 3 plan, they would have received nothing. Under today’s revised plan, they would receive around $654 back on their return.
Take someone earning $60,000. They were scheduled to receive a tax cut of $375 under the old plan. Under the revised schedule, they’ll receive $1179.
The inflection point occurs around the $150,000 mark.
If an Australian has a taxable income of $140,000, they’ll be around $500 better off under the new plan.
But if they have a taxable income of $160,000, they’ll still receive a tax cut – but it will be around $900 less.
What if you earn more than $200,000? Under the old stage 3 plan, you were destined to receive a tax cut of just over $9000.
Under the new plan, that has been brought down to around $4,500.
