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Australia’s income tax system is undergoing significant changes starting from 1 July 2024, with most taxpayers set to benefit from reduced rates and expanded thresholds. Understanding how these updates impact your income is essential—whether you’re employed, self-employed, or earning from foreign or investment sources.
In this guide, we break down tax rates, deductions, offsets, Medicare levies, and help available for individuals filing tax returns for 2023–24 and 2024–25.
1. Income Tax Rates: What’s Changed in 2024–25?
The new income tax brackets for Australian residents aged 18 and over are more favorable. Compared to the 2023–24 year, marginal tax rates have been lowered for most brackets.
| Taxable Income | 2024–25 Tax Payable |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 + 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 + 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 + 45c for each $1 over $190,000 |
Note: These rates exclude the 2% Medicare levy.
2. Example Tax Calculation (2023–24):
If you earned $60,000, your tax would be:
- First $18,200: No tax
- Next $26,800 (to $45,000): 19% → $5,092
- Remaining $15,000: 32.5% → $4,875
- Total Tax: $9,967 (excluding Medicare)
3. Medicare Levy and Surcharge
- Standard Medicare Levy: 2% of taxable income
- Levy Surcharge (1–1.5%) applies if:
- You don’t have sufficient private health cover, and
- Your income exceeds a certain threshold
4. Income Types: What’s Taxable and What’s Not?
Taxable Income Includes:
- Salary and wages
- Pensions and annuities
- Government payments (e.g., JobSeeker)
- Investment income and capital gains
- Business or freelance income
- Foreign income
Non-Taxable Income:
- Lottery/prize winnings
- Certain grants or redundancy payments
- Child support
- Government super co-contributions
5. Reduce Your Tax Bill: Deductions, Offsets & Packaging
Tax Deductions:
Reduce your taxable income
Examples:
- Work-related expenses
- Union fees
- Donations
- Accountant fees
Tax Offsets:
Reduce your tax payable directly
Examples:
- Low-income earners
- Seniors and pensioners
- Super income stream rebates
Salary Packaging:
Exchange part of your salary for non-cash benefits (e.g., car lease, extra super). This reduces your taxable income but items can’t be claimed as deductions.
6. Lodging Your Tax Return: Deadlines and Support
Most individuals must lodge a return at the end of each financial year (June 30). You can file:
- Through ATO online via myGov
- With a registered tax agent
7. Where to Get Help
ATO’s Tax Help (Free):
- For incomes under $60,000
- Runs July–October
- Online, phone, or in-person assistance
National Tax Clinic:
- For those needing help with past returns or who can’t afford professional tax services
Tax in Australia can be complex, but with the 2024–25 changes, most people will take home more income. Staying informed about brackets, deductions, and offsets ensures you maximize refunds and minimize liabilities. Use ATO’s tools or seek help to navigate your obligations confidently.
For further details, clarification, contributions, or any concerns regarding this article, please get in touch with us at editorial@tax.news. We value your feedback and are committed to providing accurate and timely information. Please note that our privacy policy will handle all inquiries.
