The 19% rate drops to 16% for incomes between $18,200 and $45,000, while the 32.5% rate reduces to 30% for incomes up to $135,000. Higher tax brackets have also been adjusted, with the 37% rate now starting at $135,000 and the 45% rate at $190,000.

The changes provide substantial relief for working families. A person earning $40,000 receives a $654 tax cut annually, while someone on $75,000 gets $1,554. For dual-income households, the benefits can be even greater - a couple each earning $90,000 would receive a combined tax cut of $3,858.

The reform particularly benefits women, with all 6.5 million women taxpayers receiving a tax cut averaging around $1,650. The government has also increased Medicare levy low-income thresholds, ensuring more than a million Australians on lower incomes pay a reduced levy rate or are exempt.

While the decision to revise the tax cuts sparked political debate about Albo breaking an election promise, the redesigned system delivers more substantial relief to low and middle-income earners facing cost of living pressures, while still helping address bracket creep across the tax system.

Budget update - More tax cuts!!

[1] https://www.pm.gov.au/media/tax-cuts-help-australians-cost-living

[2] https://taxcuts.gov.au/

[3] https://treasury.gov.au/sites/default/files/2024-01/tax-cuts-government-fact-sheet.pdf