Updated Tax Rates for FY25

Published: 1-Nov-2024

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The Australian Government has introduced new tax cuts for the 2025 financial year which aim to ease the cost of living for middle-income earners and stimulate the economy.

While the original Stage 3 tax cuts proposed a single 30% tax bracket for income between $45,000 and $200,000, these plans have since been diluted and now provide more immediate relief to lower and middle-income earners.

Here are the new tax rates:

• Tax-free threshold: $18,200
• 16% tax bracket: $18,201 to $45,000
• 30% tax bracket: $45,001 to $135,000
• 37% tax bracket: $135,001 to $190,000
• 45% tax bracket: $190,000 and over

The above rates do not include the Medicare levy of 2%.

How will these changes affect different income levels?

Here are a few examples:

• Low-income earner ($30,000 per year):
  • Previous tax year: $2,842 tax payable
  • FY25: $2,488 tax payable
  • Net tax saving of $354

• Middle-income earner ($80,000 per year):
  • Previous tax year: $18,067 tax payable
  • FY25: $16,388 tax payable
  • Net tax saving of $1,679
    
    
• High-income earner ($150,000 per year):
  • Previous tax year: $43,567 tax payable
  • FY25: $39,838 
  • Net tax saving of $3,729

You can visit the following websites for more detailed information:

• Australian Taxation Office (ATO): https://www.ato.gov.au/
• Tax Cuts website: https://taxcuts.gov.au/
• Moneysmart tax calculator: https://moneysmart.gov.au/work-and-tax/income-tax-calculator/

Note: It's always recommended to consult with a tax professional for personalised advice, especially if you have complex financial arrangements.