Stage 3 Tax Cuts Plan

Australian Prime Minister Anthony Albanese has unveiled comprehensive changes to stage three tax cuts, aiming to provide “broader and better” outcomes for all taxpayers while specifically targeting cost-of-living relief for low and middle-income earners.

The adjustments include reducing the lowest income tax rate from 19% to 16% and the second lowest from 32.5% to 30%, alongside increases in the Medicare levy threshold and the top 45% tax threshold.

Albanese, addressing the National Press Club in Canberra, emphasised that these changes would alleviate living costs and enhance workforce participation, benefiting all 13.6 million taxpayers.

Below is a summary of the proposed new Stage 3 Tax Cuts:

Earn up to $18,200pay no tax

Pay a 16 per cent tax rate on each dollar earned between $18,201 – $45,000

Pay a 30 per cent tax rate on each dollar earned between $45,001 – $135,000

Pay a 37 per cent tax rate on each dollar earned between $135,001 – $190,000

Pay a 45 per cent tax rate on each dollar earned above $190,000

The plan encompasses a variety of alterations affecting each income tax bracket, with a focus on benefiting workers earning less than $45,000 and incentivising parents to return to work.

Albanese asserted that a worker with an average wage of $73,000 would receive a tax cut of over $1,500, doubling the original plan, and a higher-income earner on $190,000 would receive a $4,500 tax cut.

Under the original plan, the 30 per cent tax bracket, would apply all income earned between $45,001 to $200,000, benefiting a taxpayer on $200,000 per annum by $9,075.

The Prime Minister justified the change to focusing on “middle Australia” in response to the COVID-19 pandemic, rising interest rates, and global events like the war in Ukraine.

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