How much will you save with the updated tax rates?
The Australian Taxation Office (ATO) has recently updated the individual income tax rates, bringing some welcome relief to many Australians. These changes aim to provide tax cuts that increase disposable income, allowing you to keep more of your hard-earned money. Let’s break down the new tax rates and see how much you could save based on different income levels.
The New Tax Rates
The new tax rates, which took effect from 1 July 2024, are part of the government’s plan to simplify the tax system and reduce the overall tax burden on Australians. Here are the key changes:
- Reduced the 19 per cent tax rate to 16 per cent
- Reduced the 32.5 per cent tax rate to 30 per cent
- Increased the threshold above which the 37 per cent tax rate applies from $120,000 to $135,000
- Increased the threshold above which the 45 per cent tax rate applies from $180,000 to $190,000.
These changes are designed to benefit low and middle-income earners the most, but higher-income earners will also see some tax relief.
Tax Savings Based on Different Incomes
Let’s look at how these new tax rates will impact three different salary levels: $65,000, $80,000, and $120,000.
- Salary: $65,000
- Previous Tax: Under the old tax rates, someone earning $65,000 would have paid approximately $11,592 in tax.
- New Tax: With the updated rates, this amount reduces to about $10,288.
- Tax Savings: $1,304
- Salary: $80,000
- Previous Tax: For an $80,000 salary, the tax payable would have been around $16,467.
- New Tax: Under the new system, the tax payable drops to approximately $14,788.
- Tax Savings: $1,679
- Salary: $120,000
- Previous Tax: A $120,000 salary would have incurred a tax bill of roughly $29,467.
- New Tax: The revised tax would be around $26,788.
- Tax Savings: $2,679
What This Means for You
These tax savings mean more money in your pocket – you can enjoy the reduced tax rates as a relief from the rising costs of living, or choose to be more intentional and use the additional cashflow to increase your savings, invest or reduce your debts.
How Can Apex Financial Services Group Help?
Understanding how these tax changes affect you personally is crucial. At Apex Financial Services Group, we’re here to help you navigate these updates and optimize your financial strategies. Whether you want to adjust your budget, reassess your savings goals, or explore investment opportunities, our team of expert financial advisers is ready to assist you.
Don’t let tax changes catch you off guard—contact Apex Financial Services Group today to ensure you’re making the most of your financial situation under the new tax rates. We’re here to help you secure your financial future.
Reference:
Australian Taxation Office. (2024). Individual income tax rates and threshold changes. Retrieved from https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/individual-income-tax-rates-and-threshold-changes