The Government's Personal Income Tax Plan, as announced in the 2018-19 Federal budget, has been passed by Parliament.
There will be:
changes to income tax rate thresholds in the 2018-19, 2022-23 and 2024-25 income years
a new low and middle income tax offset to reduce the tax payable by low and middle income earners in the 2018-19, 2019-20, 2020-21 and 2021-22 income years
a new low income tax offset from the 2022-23 income year (to replace both the new low and middle income tax offset and the current Low Income Tax Offset ).
The following table outlines the updated rates and thresholds along with the updated offset entitlements linked to these changes.
Detail of these changes
Increase to income tax rate thresholds
2018-19, 2019-20, 2020-21 and 2021-22 income years
Increase the top threshold of the 32.5% tax bracket from $87,000 to $90,000
2022-23 and 2023-24 income years
Increase the top threshold of the 19% tax bracket from $37,000 to $41,000.
Increase the top threshold of the 32.5% bracket from $90,000 to $120,000.
2024-25 income year onwards
Increase the top threshold of the 32.5% tax bracket from $120,000 to $200,000.
New low and middle income tax offset
2018-19, 2019-20, 2020-21 and 2021-22 income years
Australian resident individuals (and certain trustees) whose income does not exceed $125,333 are entitled to the new low and middle income tax offset. Entitlement to the new offset is in addition to the existing Low Income Tax Offset.
If your income:
does not exceed $37,000 you are entitled to $200
exceeds $37,000 but does not exceed $48,000 you are entitled to $200 plus 3% of the amount of the income that exceeds $37,000
exceeds $48,000 but not $90,000, you are entitled to $530
exceeds $90,000 you are entitled to $530 less 1.5% of the amount of the income that exceeds $90,000.
New low income tax offset
2022-23 and later income years
A new low income tax offset replaces both the current Low Income Tax Offset and the low and middle income tax offset.
Consistent with the current Low Income Tax Offset, individuals with taxable income that does not exceed $66,667 (as well as certain trustees taxed on behalf of individuals) will be entitled to the new low income tax offset.
The amount of the new low income tax offset is $645 reduced by:
6.5% of the amount by which your income exceeds $37,000 but does not exceed $41,000 and
a further 1.5% of the amount by which your relevant income exceeds $41,000.