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  • Personal Income Tax Plan

    The government's Personal Income Tax Plan, as announced in the 2018–19 federal Budget, was passed by parliament in June 2018 (see Treasury Laws Amendment (Personal Income Tax Plan) Act 2018External Link).

    The legislation introduces changes to income tax thresholds and tax offsets.

    On this page:

    See also:

    Note: Further changes to the Personal Income Tax Plan have been announced in the 2019–20 federal Budget. For details on these changes, see proposed changes to the Personal Income Tax Plan).

    Changes announced in the 2018–19 Budget

    The changes announced in the 2018–19 Budget that are now law, include:

    • changes to income tax rate thresholds in the 2018–19, 2022–23 and 2024–25 income years
    • a new low and middle income tax offset to reduce the tax payable by low and middle income earners in the 2018–19, 2019–20, 2020–21 and 2021–22 income years
    • a new low income tax offset from the 2022–23 income year (to replace both the new low and middle income tax offset and the current low income tax offset).

    The following table outlines the rates and thresholds that apply, along with the offset entitlements related to these changes.

    Updated rates, tax thresholds and offset entitlements

    Rate

    From 1 July 2018
    Income range ($)

    From 1 July 2022
    Income range ($)

    From 1 July 2024
    Income range ($)

    Tax free

    0–18,200

    0–18,200

    0–18,200

    19%

    18,201–37,000

    18,201–41,000

    18,201–41,000

    32.5%

    37,001–90,000

    41,001–120,000

    41,001–200,000

    37%

    90,001–180,000

    120,001–180,000

    45%

    >180,000

    >180,000

    >200,000

    New low and middle income tax offset

    Up to 530

    Current low income tax offset

    Up to 445

    New low income tax offset

     

    Up to 645

    Up to 645

    Increased income tax rate thresholds

    There are a number of new income tax thresholds for the 2018–19, 2022–23 and 2024–25 income years. These changes apply to residents, foreign-residents and working holiday makers.

    Pay as you go (PAYG) withholding rates and schedules will be updated to include these changes.

    The increased income tax thresholds are as follows:

    • For 2018–19, 2019–20, 2020–21 and 2021–22, income years
    • Increase the top threshold of the 32.5% tax bracket will increase from $87,000 to $90,000.
    • For 2022–23 and 2023–24, the top threshold of
      • the 19% tax bracket will increase from $37,000 to $41,000
      • the 32.5% bracket will increase from $90,000 to $120,000.
       
    • For 2024–25 income year onwards, the top threshold of the 32.5% tax bracket will increase from $120,000 to $200,000.

    New low and middle income tax offset

    A new low and middle income tax offset applies for 2018–19, 2019–20, 2020–21 and 2021–22 income years.

    Australian resident individuals (and certain trustees) whose income does not exceed $125,333 are entitled to the new low and middle income tax offset. Entitlement to the new offset is in addition to the existing low income tax offset, and is available on assessment after you lodge your income tax return.

    If your income:

    • does not exceed $37,000 you are entitled to $200
    • exceeds $37,000 but does not exceed $48,000, you are entitled to $200 plus 3% of the amount of the income that exceeds $37,000
    • exceeds $48,000 but not $90,000, you are entitled to $530
    • exceeds $90,000 you are entitled to $530 less 1.5% of the amount of the income that exceeds $90,000.

    New low income tax offset

    A new low income tax offset applies for 2022–23 and later income years.

    The new low income tax offset replaces both the current low income tax offset and the low and middle income tax offset.

    Consistent with the current low income tax offset, individuals with taxable income that does not exceed $66,667 (as well as certain trustees taxed on behalf of individuals) will be entitled to the new low income tax offset.

    The amount of the new low income tax offset is $645, reduced by:

    • 6.5% of the amount by which your income exceeds $37,000 but does not exceed $41,000
    • a further 1.5% of the amount for income above $41,000.

    More information

    For employers, the Pay as you go (PAYG) withholding tax tables have also been updated.

    For more information, refer to Budget 2018-19.

      Last modified: 18 Apr 2019QC 56085