Melbourne – In a recent move, the Australian federal government has decided to bring forward tax cuts that were initially legislated five years ago, aiming to provide increased benefits to low- and middle-income earners. This decision, though breaking a prior election promise not to alter stage 3 tax cuts, signifies a shift towards supporting those with lower incomes, resulting in higher earners receiving only half of their anticipated benefits.

Commencing from July 1 of the upcoming financial year, every worker is expected to see a slight increase in their take-home pay. Unlike previous lump-sum tax offsets, such as the “LMITO,” the additional funds will be incorporated into regular paychecks, reducing the amount of tax withheld.

It is essential to note that these changes are contingent on the federal government successfully passing the proposed tax reforms through parliament. The support of the Greens and some crossbench members is crucial for the implementation of these adjustments.

The revised stage 3 tax cut brackets are outlined below:

• Income up to $18,200: No tax
• 16% tax rate on each dollar earned between $18,201-$45,000
• 30% tax rate on each dollar earned between $45,001-$135,000
• 37% tax rate on each dollar earned between $135,001-$190,000
• 45% tax rate on each dollar earned above $190,000

In comparison, the previous plan included higher tax rates for certain income brackets, with the most significant difference in the range of $45,001-$200,000. The alterations aim to ensure a fairer distribution of tax relief among different income groups.