2024-2025 Federal Budget - Personal Taxation

Personal Income Tax - Cost of Living Tax Cuts

The Government has legislated permanent tax cuts for all 13.6 million Australian taxpayers from 1 July 2024. The tax cuts provide cost-of-living relief, return bracket creep, support women and boost labour supply.
Under the Government's tax cuts, from 2024-25:

• the 19 per cent tax rate will be reduced to 16 per cent
• the 32.5 per cent tax rate will be reduced to 30 per cent
• the income threshold above which the 37 per cent tax rate applies will be increased from $120,000 to $135,000
• the income threshold above which the 45 per cent tax rate applies will be increased from $180,000 to $190,000.

This measure is estimated to decrease receipts by $1.3 billion over the 5 years from 2023-24.

Budget Speech p 4
Budget Paper No. 1 p 8
Budget Paper No. 2 p 12
Budget Overview p 12
Media Release
Easing cost-of-living pressures p 1

Personal Income Tax - Cost of Living - Increasing the Medicare levy low-income thresholds

The Government has increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2023 to provide cost-of-living relief. The increase to the thresholds accounts for recent annual CPI outcomes and is estimated to decrease receipts by $640 million over the four years to 2026-27. The threshold for singles has been increased from $24,276 to $26,000. The family threshold has been increased from $40,939 to $43,846. For single seniors and pensioners, the threshold has been increased from $38,365 to $41,089. The family threshold for seniors and pensioners has been increased from $53,406 to $57,198. The family income thresholds will now increase by $4,027 for each dependent child, up from $3,760.

Budget Paper No. 2 p 12
Budget Overview p 13

Strengthening the foreign resident capital gains tax regime

The Government will strengthen the foreign resident capital gains tax (CGT) regime to ensure foreign residents pay their fair share of tax in Australia and to provide greater certainty about the operation of the rules. This measure will ensure that Australia can tax foreign residents on direct and indirect sales of assets with a close economic connection to Australian land, more in line with the tax treatment that already applies to Australian residents. This measure is estimated to increase receipts by $600.0 million and increase payments by $8.0 million over the 5 years from 2023-24.

Budget Paper No. 2 p 17
Media Release

Strengthening Tax Compliance - Extending the Personal Income Tax Compliance Program

The Government will extend the ATO Personal Income Tax Compliance Program for one year from 1 July 2027. This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming of deductions, incorrect reporting of income and inappropriate tax agent influence. This measure is estimated to increase receipts by $180.3 million and increase payments by $44.3 million over the 5 years from 2023-24.

Budget Paper No. 1 p 8
Budget Paper No. 2 p 15
Media Release

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