The recent legislative updates surrounding the much-discussed Stage 3 tax cuts have now been solidified into law, signalling significant shifts for individuals in various income brackets. With these changes, particularly affecting those earning above $155,000 from 1 July 2024, understanding the implications and opportunities for tax planning has never been more critical.
2024 income year: an overview of tax rates for strategic planning
As we gear towards the 2024 income year (ending 30 June 2024), let’s dissect the current tax rates under the Stage 2 tax cuts. This information is crucial in formulating tax minimisation strategies:
Individual resident tax rates for 2024 (excluding medicare levy):
| Taxable income |
Tax on this income |
| 0 – $18,200 |
Nil |
| $18,201 – $45,000 |
19 cents for each $1 over $18,200 |
| $45,001 – $120,000 |
$5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 – $180,000 |
$29,467 plus 37 cents for each $1 over $120,000 |
| Over $180,000 |
$51,667 plus 45 cents for each $1 over $180,000 |
The Stage 3 tax revisions, taking effect for the income year ending 30 June 2025, have altered the landscape once again. Prior to the repeal, the Stage 3 tax rates stood as follows for the 2025 income year:
Scrapped tax cuts: a glimpse at what was planned for 2025
Individual resident tax rates for 2025 (excluding medicare levy):
| Taxable income |
Tax on this income |
| 0 – $18,200 |
Nil |
| $18,201 – $45,000 |
19 cents for each $1 over $18,200 |
| $45,001 – $200,000 |
$5,092 plus 30 cents for each $1 over $45,000 |
| Over $200,000 |
$29,467 plus 45 cents for each $1 over $200,000 |
New tax cuts: 2025 income year — your guide to lower rates and better planning
As we welcome the newly legislated tax rates for the 2025 income year, let’s delve into the details that shape potential tax planning strategies:
Individual resident tax rates for 2025 (excluding Medicare levy):
| Taxable income |
Tax on this income |
| 0 – $18,00 |
Nil |
$18,201 – $45,000 |
16 cents for each $1 over $18,200 |
$45,001 – $135,000 |
$4,288 plus 30 cents for each $1 over $45,000 |
$135,001 – $190,000 |
$31,288 plus 37 cents for each $1 over $135,000 |
Over $190,000 |
$51,638 plus 45 cents for each $1 over $190,000 |
Harnessing tax planning opportunities for maximum benefit
With the impending tax rate changes, savvy individuals should consider adjusting their income streams. Where feasible, it might be beneficial to defer income to post-1 July 2024 to capitalise on generally lower tax rates. This strategic deferral can align with tax reduction goals and enhance personal financial planning.
In contrast, it might be prudent to accelerate allowable deductions or tax-deductible expenses into the current income year (ending 30 June 2024). Given the higher tax rates in 2024 compared to those expected in 2025, the value derived from deductions could be significantly higher.
Explore tax planning with LDB: personalised strategies for tax reduction
LDB’s Taxation Specialists are at the forefront, offering bespoke advice tailored to your unique financial circumstances. By exploring tax planning opportunities with us, you’re not just complying with the new tax laws — you’re positioning yourself for optimal financial health.
Ready to maximise your savings? Contact LDB today
Don’t let the complexity of tax changes leave you behind. Whether you’re looking to enhance your tax minimisation strategies or seek comprehensive tax planning services, LDB is your trusted partner. Our experts will guide you through the intricacies of tax reduction, ensuring that you’re well-prepared to navigate the new tax landscape.
To secure your financial future with strategic tax planning that aligns with the latest legislation, reach out to the Taxation Specialists at LDB. We’re here to provide you with the insights and guidance necessary for effective tax strategy implementation and to help you maximise your tax savings.
Connect with us at (03) 9875 2900 and let’s craft the perfect tax strategy for your needs.
