June 24th 2024.
After much anticipation and revisions, the long-awaited stage 3 tax cuts are finally here and will officially take effect next Monday, July 1. It's been years since their initial announcement and months of adjustments, but the wait is finally over. These tax cuts will not be a one-time lump sum added to your bank account after filing your taxes like other cuts in the past. Instead, you will start seeing the benefits from the very first pay slip of the new financial year in July.
You may be wondering how these stage 3 tax cuts will work and how much you can expect to benefit from them. Well, let's break it down for you. Unlike the recently ended low- and middle-income tax offset, which provided a bigger tax return at the end of the year, these new cuts are different. By altering Australia's tax brackets, they aim to reduce the amount of tax that everyone pays on their income.
For the majority of taxpayers, this means that instead of receiving a large tax return once a year, you will be paying less in taxes and taking home more of your paycheck each week, fortnight, or month. It's essentially a pay raise that you didn't even have to request.
Now, you might be wondering how much of a tax cut you can expect to receive. According to the government, the average tax cut will be $1888 per year, which breaks down to about $36 per week. However, the exact amount will vary from person to person depending on their income. For instance, those earning $18,000 or less will not receive a tax cut as no one pays taxes on the first $18,200 they earn.
If you earn the minimum wage, which will be $47,626 as of July 1, you can expect an $870 cut over the course of the year, which amounts to just under $16.70 per week. As your salary increases, so does the amount of your tax cut. For example, someone earning $100,000 will have an extra $42 to save or spend each week, while those making $190,000 will receive $87 per week, which comes out to $4529 per year.
Keep in mind that these numbers are just estimates based on data from the federal government. Your actual tax cut may vary due to factors such as tax offsets, the Medicare levy, and other financial circumstances. It's worth noting that the information provided on this website is general in nature and should not be considered personal financial advice. Before making any financial decisions, it's essential to consider your specific objectives, financial situation, and needs.
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