Although already legislated in revised form, the Stage 3 Tax Cuts remain one of the key pillars of the Government’s Cost of Living Relief package, delivering a tax cut to 13.6 million taxpayers. And for two more years the Government will deliver what it is referring to as a top up tax cut for every taxpayer. The current and new resident tax rates are as follows:
PERSONAL TAX RATES
Legislated resident tax rates from 1 July 2024 and into the future at this point are:
| Threshold | Rate 2024 – 25 and 2025 – 26 | Rate 2026 – 27 | Rate 2027 – 28 |
| $0 – $18,200 | 0% | 0% | 0% |
| $18,201 – $45,000 | 16% | 15% | 14% |
| $45,001 – $135,000 | 30% | 30% | 30% |
| $135,001 – $190,000 | 37% | 37% | 37% |
| $190,001+ | 45% | 45% | 45% |
Medicare is an additional 2% where applicable
Medicare Levy low-income threshold increase
As part of cost of living relief, Medicare low-income thresholds are increased so low-income individuals continue to be exempt from paying the Medicare Levy.
The threshold for singles will be increased from $26,000 to $27,222. The family threshold will be increased from $43,846 to $45,907. For single seniors and pensioners, the threshold will be increased from $41,089 to $43,020. The family threshold for seniors and pensioners will be increased from $57,198 to $59,886. For each dependent child or student, the family income thresholds will increase by a further $4,216 instead of the previous amount of $4,027.
HECS/HELP student debt indexation changes
Following on from changes to indexation rates last year that gave relief to 3 million people, the Government reiterated an election pledge to cut 20% of all HELP study debts. This is conditional on the Government being re-elected at the next election.
ATO funding and compliance program extension
The Government will again extend and expand the ATO Personal Income Tax Compliance Program injecting $75.7 million over four years from 1 July 2025.
This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming of deductions, incorrect reporting of income and inappropriate tax agent influence. Common areas of focus include rental properties and work related tax deductions.
SUPERANNUATION
The Government honoured their pre-election promise to make no changes to the superannuation system. In the 93 pages of Budget Paper No. 2 there are only two instances of the word “superannuation” and both in the context of compliance programs and unpaid superannuation as opposed to any regulatory or tax changes.
Whilst this does honour the pre-election promise, it also comes in the wake of the controversial Division 296 tax on superannuation balances over $3 million not succeeding through Parliament due a lack of crossbench support. The Government has pledged to take this issue to the election.
An important reminder that the absence of any changes to superannuation means that the Superannuation Guarantee rate will increase from the current 11.5% to 12% from 1 July 2025. There are currently no further legislated increases to the rate beyond 12%.
For more information on the March 2025 Federal Budget, please click here for our overview.
