The Australian Taxation Office (ATO) has updated the income tax rates for Australian residents for the 2024–25 financial year (1 July 2024 to 30 June 2025), incorporating the Stage 3 tax cuts effective from 1 July 2024. These rates apply to Australian residents for tax purposes and do not include the 2% Medicare levy, which is generally applicable unless exemptions apply.
Key Changes for 2024–25
-Lower Tax Rates: The tax rate for income between $18,201 and $45,000 has decreased from 19% to 16%. The tax rate for income between $45,001 and $135,000 has decreased from 32.5% to 30%.
– Higher Thresholds: The threshold for the 37% tax rate has increased from $120,000 to $135,000, and the threshold for the 45% tax rate has increased from $180,000 to $190,000.
– Medicare Levy: A 2% Medicare levy applies to most residents, unless exempt (e.g., low-income earners with thresholds at $27,222 for singles, $45,907 for families, or $43,020 for seniors/pensioners). A Medicare levy surcharge of 1% to 1.5% may apply for high-income earners without adequate private health insurance.
– Low Income Tax Offset (LITO): Available for residents with taxable income up to $66,667, with a maximum offset of $700, which phases out as income increases. This effectively means no tax is payable on income up to $21,884 for eligible residents.
2024–25 Tax Rates for Australian Residents
Taxable Income Tax Rate
$0 – $18,200 0% (Tax-free threshold)
$18,201 – $45,000 16% on each dollar over $18,200
$45,001 – $135,000 $4,288 + 30% on each dollar over $45,000
$135,001 – $190,000 $31,288 + 37% on each dollar over $135,000
$190,001 and over $51,638 + 45% on each dollar over $190,000
Example Calculations
– Income of $40,000:
– Tax on $18,201–$40,000: ($40,000 – $18,200) × 16% = $3,488.
– Total tax: $3,488 + 2% Medicare levy ($800) = ~$4,288 (before offsets).
– Income of $100,000:
– Tax on $18,201–$45,000: ($45,000 – $18,200) × 16% = $4,288.
– Tax on $45,001–$100,000: ($100,000 – $45,000) × 30% = $16,500.
– Total tax: $4,288 + $16,500 = $20,788 + 2% Medicare levy ($2,000) = $22,788 (before offsets).
Notes
– The tax-free threshold of $18,200 is reduced for part-year residents.
– Special rates apply to unearned income for those under 18 (e.g., trust distributions).
– Tax offsets like LITO and others may reduce the final tax payable.
– For precise calculations, use the ATO’s Simple Tax Calculator or Income Tax Estimator.
For further details, visit the ATO website: www.ato.gov.au.