Stage 3 tax cuts explained: how much will you get in 2024?

The stage 3 tax cuts are coming in July, 2024. Under the new rules, the five current tax brackets will be rolled into four instead.

Transcript

00:00 [Music]

00:13 Here's how the current tax brackets work. So at the moment there are five tax brackets.

00:20 Each of these buckets represents the five tax brackets. The water in this bucket

00:27 represents a salary of $200,000 a year. So let's see how that's taxed under the current system

00:36 and then how it will change under the stage three cuts. A salary of $200,000. The first $18,200

00:46 is tax-free so it will go into the tax-free bucket. The next $26,800 of the salary is then taxed at

00:56 19%. Then $75,000 of the salary will end up in the 32.5% tax bracket.

01:18 The next fits $60,000 which will be taxed at 37%. And finally the remaining $20,000

01:30 will end up over here and is taxed at 45%.

01:40 But when the stage three tax cuts come into force on July 1st 2024 these two buckets here

01:49 will be joining. Which will mean that amounts ranging from $45,001 to $200,000

02:02 will be taxed at 30%. And it will mean in order to be tipped into this

02:09 45% bucket you will have to be earning more than $200,000 every year.

02:21 So

02:30 yeah.