In this guide
- Australian income tax rates for 2024–25 onwards (residents)
- Tax cuts from 1 July 2024
- Australian income tax rates for 2023–24 (residents)
- How income tax is calculated
- What is the tax-free threshold?
- Tax offsets and deductions
- What is included in assessable income?
- What deductions are you allowed?
- What is taxable income?
- Income tax offsets, levies and surcharges
In the March 2025 Federal Budget, two new income tax cuts were announced to commence from 1 July 2026 and 1 July 2027. These cuts have now been legislated.
The changes announced are:
- From 1 July 2026, the 16% tax rate, which applies to taxable income between $18,201 and $45,000, would be reduced to 15%
- From 1 July 2027, this tax rate would be further reduced to 14%.
For any worker earning more than $45,000 this equates to a tax cut of $268 in 2026-27 and $536 per year from 2027-28, compared to 2024-25 tax rates.
The Government also announced they will increase the Medicare levy low-income thresholds by 4.7% from 1 July 2024 (the current tax year).
The Australian Tax Office (ATO) collects income tax from working Australians each financial year. In Australia, financial years run from 1 July to 30 June the following year, so we are currently in the 2024–25 financial year (1 July 2024 to 30 June 2025).
The income tax brackets and rates for Australian residents for both this financial year and the previous financial year are listed below.
Important
Over the last few years both the Coalition and Labor governments announced income tax cuts that have been applied in stages since 2018, including changes (known as the stage 3 tax cuts) that apply from July 2024. These changes are now law after passing both houses of parliament on 27 February 2024.
The changes that apply from 1 July 2024 are:
- The bottom tax rate decreases from 19% to 16%
- The 32.5% tax rate decreases to 30%
- The threshold above which the 37% tax rate applies increases from $120,000 to $135,000
- The threshold above which the top 45% tax rate applies increases from $180,000 to $190,000.
The income tax brackets and rates for Australian residents for next financial year and subsequent financial years are listed below.
Australian income tax rates for 2024–25 onwards (residents)
| Income thresholds | Rate | Tax payable on this income |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | 45% | $51,638 plus 45c for each $1 over $190,000 |
Note: The above amounts do not include Medicare Levy or the impact of tax offsets such as the Low Income Tax Offset (LITO).
SuperGuide has many guides that can help you reduce your tax and simultaneously boost your super.
Tax cuts from 1 July 2024
The table below lists the approximate tax cut for various income levels from 1 July 2024 compared to previous years.
| Income | 2023-24 tax paid | 2024-25 tax paid | Tax cut |
|---|---|---|---|
| $20,000 | $342 | $288 | $54 |
| $30,000 | $2,242 | $1,888 | $354 |
| $40,000 | $4,142 | $3,488 | $654 |
| $50,000 | $6,717 | $5,788 | $929 |
| $60,000 | $9,967 | $8,788 | $1,179 |
| $70,000 | $13,217 | $11,788 | $1,429 |
| $80,000 | $16,467 | $14,788 | $1,679 |
| $90,000 | $19,717 | $17,788 | $1,929 |
| $100,000 | $22,967 | $20,788 | $2,179 |
| $110,000 | $26,217 | $23,788 | $2,429 |
| $120,000 | $29,467 | $26,788 | $2,679 |
| $130,000 | $33,167 | $29,788 | $3,379 |
| $140,000 | $36,867 | $33,138 | $3,729 |
| $150,000 | $40,567 | $36,838 | $3,729 |
| $160,000 | $44,267 | $40,538 | $3,729 |
| $170,000 | $47,967 | $44,238 | $3,729 |
| $180,000 | $51,667 | $47,938 | $3,729 |
| $190,000 | $56,167 | $51,638 | $4,529 |
| $200,000 | $60,667 | $56,138 | $4,529 |
Note: The above amounts do not include Medicare Levy or the impact of tax offsets such as the Low Income Tax Offset (LITO).
Try SuperGuide’s income tax calculator to understand the offsets and levies that apply to you, and discover your effective tax rate.
A summary of the income tax changes from 2018-19 is below.
- Stage 1 (2018–19 to 2019–20): A new temporary LMITO to a maximum of $1,080, operating in addition to the existing Low Income Tax Offset (LITO)
- Stage 2 (2020–21 onwards): Retaining LMITO ($1,080 for 2020–21 and $1,500 for 2021–22 only), increasing LITO from $455 to a maximum of $700, raising the upper threshold for the 19% tax bracket from $37,000 to $45,000, changing the 32.5% tax bracket from $37,001–$90,000 to $45,001–$120,000 and raising the lower threshold for the 37% tax bracket from $90,001 to $120,001
- Stage 3 (2024–25 onwards): Lowering the bottom tax rate from 19% to 16%, decreasing the 32.5% rate to 30%, raising the 37% lower threshold from $120,000 to $135,000 and raising the 45% lower threshold from $180,000 to $190,000
The phasing of the tax rate changes from 2016–17 onwards (for Australian residents) is set out in the following table.
Tax rate changes – Australian residents
| 2016–17 and 2017–18 | 2018–19 and 2019–20 | 2020–21*, 2021–22**, 2022–23 and 2023–24 | From 2024–25 |
|---|---|---|---|
| Taxable income Tax rate | Taxable income Tax rate | Taxable income Tax rate | Taxable income Tax rate |
| $0 to $18,200 Nil | $0 to $18,200 Nil | $0 to $18,200 Nil | $0 to $18,200 Nil |
| $18,201–$37,000 19% for amounts over $18,200 | $18,201–$37,000 19% for amounts over $18,200 | $18,201–$45,000 19% for amounts over $18,200 | $18,201–$45,000 16% for amounts over $18,200 |
| $37,001–$87,000 $3,572 + 32.5% for amounts over $37,000 | $37,001–$90,000 $3,572 + 32.5% for amounts over $37,000 | $45,001–$120,000 $5,092 + 32.5% for amounts over $45,000 | $45,001–$135,000 $4,288 + 30% for amounts over $45,000 |
| $87,001–$180,000 $19,822 + 37% for amounts over $87,000 | $90,001–$180,000 $20,797 + 37% for amounts over $90,000 | $120,001–$180,000 $29,467 + 37% for amounts over $120,000 | $135,001–$190,000 $31,288 + 37% for amounts over $135,000 |
| $180,001 and over $54,232 + 45% for amounts over $180,000 | $180,001 and over $54,097 + 45% for amounts over $180,000 | $180,001 and over $51,667 + 45% for amounts over $180,000 | $190,001, and over $51,637 + 45% for amounts over $190,000 |
| LITO maximum: $445 | LITO maximum: $445 | LITO maximum: $700 | LITO maximum: $700 |
| LMITO maximum: $1,080 | LMITO maximum: $1,080*, $1,500** |
Source: Treasury
*2020–21 and **2021–22 only
Australian income tax rates for 2023–24 (residents)
| Income thresholds | Rate | Tax payable on this income |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 19% | 19c for each $1 over $18,200 |
| $45,001 – $120,000 | 32.5% | $5,092 plus 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | 37% | $29,467 plus 37c for each $1 over $120,000 |
| $180,001 and over | 45% | $51,667 plus 45c for each $1 over $180,000 |
Source: ATO
Note: The above amounts do not include Medicare Levy or the impact of tax offsets such as the Low Income Tax Offset (LITO).
Continue reading to learn how Australian income tax is calculated including offsets, levies, surcharges and that may reduce or increase your income tax.
- How income tax is calculated
- Tax offsets and deductions
- What is included in assessable income?
- What deductions are you allowed?
- What is taxable income?
- Income tax offsets, levies, and surcharges
- Low Income Tax Offset (LITO)
- Low and Middle Income Tax Offset (LMITO)
- Seniors and Pensioners Tax Offset (SAPTO)
- Medicare Levy
- Medicare Levy surcharge
- Lifetime Health Cover loading
- Private Health Insurance Offset
Note: Special rules apply to income earned by those under 18 years old, who may pay tax at a higher rate on certain types of income such as a distribution from a family trust.
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