Stage three tax cuts

.

There are currently five tax brackets (including the tax-free threshold), but this will be cut to four from July 1 when Australians earning between $45,001 and $200,000 will be merged into a single bracket with a 30% tax rate rather than the existing 32.5% or 37% tax rates that apply for incomes in that range.

Additionally, the income threshold for the highest 45% tax rate will be lifted from $180,001 to $200,001.

At present, Australia’s tax brackets look like this:

· up to $18,200 – no tax

· $18,201 to $45,000 – pay a 19% tax rate

· $45,001 to $120,000 – pay a 32.5% tax rate

· $120,001 to $180,000 – pay a 37% tax rate

· $180,001 plus – pay a 45% tax rate

Under stage three, the tax brackets would look like this:

· $18,200 – no tax

· $18,201 to $45,000 – pay a 19% tax rate

· $45,001 to $200,000 – pay a 30% tax rate

· $200,001 plus – pay a 45% tax rate