From 1 July 2024, significant changes to the personal income tax rates for Australian tax residents will take effect. These changes are designed to provide more take-home pay for many Australians, impacting your overall financial planning and potentially your retirement savings strategy.
New Tax Rates and Thresholds
The new tax rates and thresholds for the 2024/25 financial year are as follows:
| Thresholds in 2023–24 | Rates in 2023–24 | Thresholds in 2024–25 | Rates in 2024–25 |
|---|---|---|---|
| $0 – 18,200 | Tax-free | $0 – 18,200 | Tax-free |
| $18,201 – 45,000 | 19% | $18,201 – 45,000 | 16% |
| $45,001 – 120,000 | 32.5% | $45,001 – 135,000 | 30% |
| $120,001 – 180,000 | 37% | $135,001 – 190,000 | 37% |
| Over $180,000 | 45% | Over $190,000 | 45% |
This Means for You
- Increased Take-Home Pay: The reduction in tax rates for several income brackets means that many Australians will see an increase in their take-home pay. For instance, the reduction from 19% to 16% for incomes between $18,201 and $45,000, and from 32.5% to 30% for incomes between $45,001 and $135,000, translates to more disposable income.
- Financial Planning Opportunities: With more disposable income, you might have the opportunity to increase your superannuation contributions, either through salary sacrifice or additional non-concessional contributions. This can help boost your retirement savings over time.
- Review Your Budget: It’s an excellent time to review your budget and financial plans. Consider how the increased take-home pay can be utilized effectively – whether it’s paying down debt, increasing savings, or investing in your future.
Planning Ahead
These changes underscore the importance of staying informed about tax regulations and how they impact your financial situation. By understanding the new tax rates and thresholds, you can better plan your finances and potentially increase your savings and investments.
If you need assistance in navigating these changes and optimizing your financial strategy, consider engaging with a financial planner. Professional advice can help you make the most of the new tax rates and ensure your financial plans align with your goals.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice, or invitation to purchase, sell, or otherwise deal in securities or other investments. Before making any decision regarding a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
