Cost-of-Living Tax Cuts Approved

The Senate has now approved the cost-of-living tax cuts proposed by the Government.

Tax Cuts Bill

In a recent development, the bill to implement Labor’s revised tax cuts has successfully passed through both houses of parliament, creating a buzz of discussions and debates across the political spectrum. Despite facing strong criticism from the Coalition and the Greens, the legislation marks a significant move in the landscape of Australia’s tax policies.

The Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024 ensures that every taxpayer receives a tax cut without fuelling inflation or imposing additional strain on the budget. Guaranteeing a tax reduction for every taxpayer, offering increased tax relief to assist with the rising cost of living.

The legislation, which successfully passed the House of Representatives on February 15th and now the Senate, is centred on providing relief and undertaking reforms – offering greater relief for workers and implementing more effective reforms for our economy.

Their goal is to empower Australians to earn more and retain a greater portion of their earnings, and our expanded tax cuts targeting a broader range of taxpayers will contribute to achieving this objective.

Tax Cuts & Thresholds

Labour’s legislation involves reducing two tax rates and raising two thresholds, representing the most effective approach to providing extended tax relief to a wider population and addressing bracket creep where it has the most significant impact.

As of July 1, 2024:

• The 19% tax rate will decrease to 16% (applying to incomes between $18,200 and $45,000).
• The 32.5% tax rate will decrease to 30% (applying to incomes between $45,000 and the new $135,000 threshold).
• The threshold for the 37% tax rate will rise from $120,000 to $135,000.
• The threshold for the 45% tax rate will rise from $180,000 to $190,000.

Calculate your tax cut here.

Who it affects?

This legislation ensures that all 13.6 million taxpayers receive a tax cut – an increase of 2.9 million compared to the plan proposed by Scott Morrison five years ago. Additionally, 11.5 million taxpayers (84% of all taxpayers) will receive a larger tax cut.

This means that 5.8 million women (90% of female taxpayers) will now benefit from a larger tax cut. Professions such as nursing, teaching, and truck driving are among those most likely to benefit, with over 95% of taxpayers in these sectors receiving increased tax relief.

Medicare Levy Bill

Today, the Senate also passed the Treasury Laws Amendment (Cost of Living – Medicare Levy) Bill 2024, which raises the Medicare levy low-income thresholds for 2023–24.

By implementing the cost-of-living tax cuts and adjustments to the Medicare levy proposed by the Albanese Government, we ensure that more individuals receive additional support to alleviate the financial strain they are facing.
Reducing taxes for middle Australia forms a pivotal component of our economic strategy, alongside initiatives to stimulate wage growth, manage inflation, and promote fairer prices for Australian consumers.

What Now?

If you’re wondering how these changes affect your tax situation or seeking advice on optimising your financial position, now is the time to act. Schedule a consultation with our knowledgeable accountants who can provide clarity and help you make the most of the opportunities presented by these reforms.