The Government’s income tax cuts have been passed by the Senate.
It is the second major tax cut in two years.
This is what that means for you.
This year: Modest cuts for most Australians
Modest tax cuts are available to millions of Australians almost immediately.
People earning between about $21,000 and up to $126,000 in the 2018-19 financial year will receive a boost.
But the laws apply unevenly across this group.
|Income in 2018-19||Tax cut|
There will be no increase for those on Newstart.
In four years: Boost for wealthier Australians
In 2022-23, a second phase of tax cuts arrive.
Ultimately, wealthier Australians will pay less due to a combination of changes to tax offsets and income thresholds.
Although this group mostly missed out on the benefits of stage one, in four years’ time they will be the big winners.
Those earning $120,000 or more will be $2,565 better off each year.
In six years: Boon for wealthiest Australians
Two years further down the track, the most controversial component of the package kicks in.
One whole tax threshold will be removed, leaving just four, and the tax rate for another threshold will be cut.
It will mean that once someone earns $45,000 in one year, every additional dollar they bring in that year will be taxed at the same rate — 32 per cent — up to $200,000.
This delivers massive cuts for those with an income close to $200,000.
For example, someone on $180,000 will be $8,640 better off.
|Stage 1||Stage 2||Stage 3|
|Income||Tax Cut from 2018-19||Tax Cut from 2022-23||Tax Cut from 2024-25|
|$ 30,000||$ 255 per year||$ 255 per year||$ 255 per year|
|$ 60,000||$ 1,080 per year||$ 1,080 per year||$ 1,455 per year|
|$ 90,000||$ 1,215 per year||$ 1,215 per year||$ 2,340 per year|
|$ 120,000||$ 315 per year||$ 2,565 per year||$ 4,440 per year|
|$ 150,000||$ 135 per year||$ 2,565 per year||$ 4,440 per year|
|$ 180,000||$ 135 per year||$ 2,565 per year||$ 8,640 per year|
Source: Extracted from www.abc.net.au