ATO Tax Brackets 2024-25: Understanding Australia's Income Tax Changes

ATO

The ATO (Australian Taxation Office) is Australia’s tax collector and government agency. The ATO ensures that the amount of tax Australians pay is correct, and in line with Australian tax law.

The ATO also aims to provide information and help to ensure that individuals and businesses meet their tax obligations.

ATO Tax Brackets 2024–25

The ATO (Australian Tax Office) will implement new tax rates and brackets in the 2024–25 income tax year.

The Australian Government will be:

Cut taxes and assist taxpayers with the cost of living.

The new tax rates and brackets commencing July 1, 2024 are:

$0 – $18,200 Nil

$18,201–45,000: 16% (down from 19%)

$45,001 – $135,000 30% (down from 32.5%)

$135,001–$190,000: 37% (threshold raised from $120,000.)

$190,000 or more 45% (threshold raised from $180,000.)

The changes will deliver tax relief for taxpayers across different income tiers, and all 13.6 million Australian taxpayers will be winners.

The cutting of tax rates and altering of thresholds will mean individuals pay less tax and keep more of their hard earned money, helping with the cost-of-living pressure.

How Do Income Tax Rates And Brackets Work In Australia?

Up to $18,200: Tax free. You don’t pay any tax on this income.

• $18,201 to $45,000:

There is no tax on the first $18,200.

16 cents for every dollar you earn, from $18,201 to $45,000.

• $45,001 to $135,000:

There is no tax on the first $18,200.

16 cents for every dollar you earn, from $18,201 to $45,000.

30 cents for every dollar you earn from $45,001 to $135,000.

• $135,001 to $190,000:

There is no tax on the first $18,200.

16 cents for every dollar you earn, from $18,201 to $45,000.

30 cents for every dollar you earn from $45,001 to $135,000.

37 cents for every dollar you earn from $135,001 to $190,000.

• $190,000 or more:

There is no tax on the first $18,200.

16 cents for every dollar you earn, from $18,201 to $45,000.

30 cents for every dollar you earn from $45,001 to $135,000.

37 cents for every dollar you earn from $135,001 to $190,000.

45 cents for every dollar of $190,000 or more.

Some people, like low-income earners and seniors, might get extra help to reduce the tax they pay.

How Will The Changes To Income Tax Rates Affect?

• Starting July 1, 2024, the tax rates for individuals will change.
• For most people, this means they will pay less tax each payday and keep more of what they earn.
• All 13.6 million Australian taxpayers will receive a tax cut from July 1, 2024.
• Some people will get their tax cut when they lodge and process their tax return after the 2024-2025 financial year ends.
• You can use a tax cut calculator to estimate how much your annual tax will be reduced.
• With lower taxes, there may be more chances for people to work extra hours and keep more of what they earn.