Undertanding the 2024 Australian Income Tax Changes

By Ben Markovic •

The Australian government recently enacted significant changes to indivdual income tax rates and thresholds, effective from 1 July 2024. These adjustments aim to provide relief for taxpayers and enhance the overall economic landscape. Let’s dive into the key modifications.

Reduced Tax Rates

These are perhaps the most noticeable changes as they will apply to the majority of workers in Australia. Effective from 1 July 2024, the following rates will be implemented:

  • The 19% tax rate has been lowered to 16%.
  • The 32.5% tax rate will now stand at 30%.

Threshold Adjustments

Further to the above changes in tax rates, the following thresholds will be adjusted from July:

  • The threshold above which the 37% tax rate applies has increased from $120,000 to $135,000.
  • Similarly, the threshold for the 45% tax rate has risen from $180,000 to $190,000.

These changes are now law and will impact all taxable income earned from 1 July 2024 onwards. It’s a good idea for taxpayers to understand how these adjustments might affect their financial planning and obligations.

1 july 2024

Is Any Action Required from Employees?

No action is required from employees. This keeps things nice and easy! Payroll systems will be updated with the new rates and employees will notice any difference to their PAYG tax withholding on their first payslip in July.

Are There Any Changes to Salary Packaging?

The salary packaging limits remain unchanged. This means that employees of FBT exempt employers can continue to salary package $15,900 pre-tax towards their expenses ($9,010 for employees of public hospitals and ambulance services). The additional $2,650 salary packaging for holiday accommodation and meal entertainment also remains in place.

Questions?

As always, please seek your own independent financial advice when it comes to your personal tax affairs. Of course, we are always happy to assist where we can! Our salary packaging calculators have been updated with the new income tax rates, so you can use these to get a bit of an idea of your tax savings. Employees can see more detail in their GO Salary portal. Employers can contact us to discuss any queries further.

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