Tax planning can be stressful when the basics of your obligations are not understood. At the foundation of these is your tax bracket. All calculations, including deductions and expenses, become far simpler when you become familiar with your relevant bracket. At Perth Mobile Tax & Business Services, we’ve compiled this guide to help you navigate Australia’s current tax rates and thresholds.
Current Income Tax Brackets
The Australian Taxation Office (ATO) has implemented the following tax rates for Australian residents for the 2024–25 financial year:
| Taxable Income Range | Tax Payable |
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16% of the amount over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30% of the amount over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37% of the amount over $135,000 |
| $190,001 and over | $51,638 plus 45% of the amount over $190,000 |
These rates do not include the Medicare Levy of 2%, which most Australian taxpayers pay in addition to income tax.
Key Changes from Previous Years
The 2024–25 tax year brings significant changes following the implementation of Stage 3 tax cuts. The most notable changes include:
- Reduction of the 32.5% tax bracket to 30%
- Increase in the threshold for the 37% tax bracket from $120,000 to $135,000
- Increase in the threshold for the 45% tax bracket from $180,000 to $190,000
These adjustments aim to provide tax relief across various income levels, with particular benefits for middle-income earners.
How Progressive Taxation Works
Australia uses a progressive tax system, meaning you pay different rates on different portions of your income. For example, if you earn $50,000:
- The first $18,200 is tax-free
- Income between $18,201 and $45,000 ($26,800) is taxed at 16% = $4,288
- Income between $45,001 and $50,000 ($4,999) is taxed at 30% = $1,499.70
- Total tax before offsets and Medicare Levy = $5,787.70
This progressive approach ensures those with higher incomes contribute proportionally more to the tax system.
Tax Planning Strategies for Different Income Levels
Lower Income Earners ($0-$45,000)
Consider claiming all eligible deductions and explore whether you qualify for the Low Income Tax Offset (LITO), which can reduce your tax liability by up to $700.
Middle Income Earners ($45,001-$135,000)
Look into salary sacrificing opportunities, particularly for superannuation contributions. The reduced 30% tax rate in this bracket makes strategic tax planning even more valuable.
Higher Income Earners ($135,001 and above)
Consider the timing of income recognition, maximise deductible expenses, and explore investment structures that might offer tax advantages. Negative gearing and trust structures may be worth discussing with our team.
How Tax Accountants Can Help
Understanding tax brackets is just the beginning of effective tax management. Our team at Perth Mobile Tax & Business Services can help you:
- Identify all potential deductions relevant to your situation
- Structure your finances to optimise your tax position
- Plan for the future with strategies aligned to your financial goals
- Ensure compliance while minimising your tax burden
Tax legislation changes regularly, and staying informed is vital for effective financial planning. Our team keeps up with all regulatory changes so you don’t have to. Contact us to arrange a consultation and ensure you’re making the most of the current tax framework. We come to you throughout the Perth Metro area, making professional tax advice more accessible than ever.
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