Stage 3 Tax Cuts – What You Need to Know

“Stage 3 Tax Cuts” have dominated headlines recently, understandably drawing the attention of Australian taxpayers. Initially set in motion by the Morrison government, these proposed changes are now undergoing adjustments under the Albanese government, with an aim to extend tax relief to a wider demographic, particularly individuals earning below $150,000 annually. The scale of benefit varies, largely based on one’s taxable income, and in this article, we’ll look at the specifics of the Stage 3 Tax Cuts and their potential impact on your personal finance – contingent of course upon the passage of relevant legislation.

Key Features of the Revised Stage 3 Tax Cuts

The Stage 3 Tax Cuts encompass several pivotal changes:

  1. Restoration of the 37% Tax Bracket: Contrary to the initial plan to abolish this bracket, it’s being reinstated, affecting earners within certain income ranges.
  2. Tax Rate Reduction for Lower Brackets: The lowest tax bracket will see a decrease to 16%, offering relief to lower-income earners.
  3. Modification of the Highest Tax Bracket Threshold: The cap for the highest tax rate is set at $190,000, altering the tax obligations for the top earners.

These adjustments will be of particular benefit to Australians earning between $45,000 and $130,000, as per the current models.

Stage 3 Tax Cuts and your Tax Position

The Stage 3 Tax Cuts promise a transformative shift in the tax structure, reaching Aussies across the income spectrum:

  • Low to Middle-Income Earners: If your annual income is below $45,000, you’ll find yourself included in the tax relief measures, a demographic initially overlooked in the original proposal.
  • Middle-Income Group: Individuals earning between $45,000 and $136,000 are positioned to receive the most substantial tax reductions.
  • High-Income Bracket: While earners above $150,000 are also set to benefit, the level of relief has been reduced compared to the original framework.

The new tax structure is slated to roll out from 1 July 2024. Unlike previous one-time tax offsets (like LMITO), these cuts will be integrated into your regular pay checks, ensuring immediate relief. However, the implementation of these plans does rest on the passage of legislative through parliament. Interestingly, the Albanese Government has not signalled any shifts in the rules concerning negative gearing for property investments. But, given the revisions to the Stage 3 Tax Cuts, we advise you stay tuned for possible changes there as well.

Tax Savings

Stage 3 Tax Cuts will bring savings to you based upon your taxable income – but these recent revisions have meant some Australians benefit more, and some less, than originally planned. See the table below for a detailed breakdown.

PAG Article Stage 3 Tax Cuts Table

Tax Bracket Transformation

Here’s how the proposed Stage 3 Tax Brackets are structured:

  • No tax for income up to $18,200
  • 16% tax on income between $18,201 and $45,000
  • 30% tax on income between $45,001 and $135,000
  • 37% tax on income between $135,001 and $190,000
  • 45% tax on income exceeding $190,000.

These changes reflect a significant overhaul from the previous plan, aiming to steer the tax system towards a fairer and more progressive framework.

What Lies Ahead

As the government’s stance on this matter has already shifted once, and legislation still needs to pass, it’s crucial to not take the savings for granted until you see them reflected in your payslip following 1 July. So, while optimism is warranted, it’s equally important to keep an eye on developments. With any luck, though, you’ll see the benefits of the Stage 3 Tax Cuts before too long!

We’re all about helping people get the most out of their money, and that includes making the most of tax cuts like these! If you’re ready to take control of your financial destiny, please contact us on 1300 349 188 or via our website.

For more information, please visit this page on the Australian Treasury’s website: Amending tax cuts to deliver broader cost-of-living relief (

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