Personal tax rates - immediate low and middle income tax offset increase
The Government announced it will provide a further reduction in tax through the non-refundable low and middle income tax offset (LMITO).
Under the changes, the reduction in tax provided by LMITO will increase to a maximum amount of $1,080 per annum and the base amount will increase to $255 per annum for the 2018-19 to 2021-22 income years.
The Low and Middle Income Tax Offset will provide a benefit of up to
• $255 for taxpayers with a taxable income of $37,000 or less
• Between taxable incomes of $37,000 and $48,000, the value of the offset will increase at a rate of 7.5 cents per dollar to the maximum offset of $1,080
• Taxpayers with taxable incomes between $48,000 and $90,000 will be eligible for the maximum offset of $1,080
• From $90,000 to $126,000 the offset will phase out at a rate of 3 cents per dollar.
The offset will be delivered on assessment of an individual’s tax return for the 2018-19 to 2021-22 income years. Therefore eligible taxpayers receive a benefit from when they lodge their 2019 income tax return.

Tax rate and threshold changes from 1 July 2022
Threshold changes
From 1 July 2022, the Government proposes to increase the top threshold of the 19% personal income tax bracket from $41,000, as currently legislated, to $45,000.
The Government announced it would reduce the 32.5% marginal tax rate to 30% from 2024-25. This is to more closely align the middle tax bracket of the personal income tax system with corporate tax rates. In 2024-25 the 37% tax bracket will be removed under the Government's already legislated plan.
Low income tax offset changes
The Government also proposes to increase the low income tax offset (LITO) from $645, as currently legislated, to $700 from 1 July 2022.
The increased LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000, instead of at 6.5 cents per dollar between taxable incomes of $37,000 and $41,000 as previously legislated.
LITO will then be withdrawn at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

Tax rates and thresholds for 2018-19 onwards
The following table reflects the proposed personal tax rate and threshold changes (excluding the 2% Medicare levy):

 

Tax rates and thresholds

Rate

2018-19 to 2021-22

2022-23 and 2023-24

2024-25 onwards

0%

$0 - $18,200

$0 - $18,200

$0 - $18,200

19%

$18,201 - $37,000

$18,201 - $45,000

$18,201 - $45,000

30%

N/A

N/A

$45,001 - $200,000

32.5%

$37,001 - $90,000

$45,001 - $120,000

N/A

37%

$90,001 - $180,000

$120,001 - $180,000

N/A

45%

$180,001+

$180,001+

$200,001+

LMITO

Up to $1,080

N/A

N/A

LITO

Up to $445

Up to $700

Up to $700

Medicare levy low-income thresholds for 2018-19

The Medicare levy low-income thresholds will be increased from the 2018/19 income year
• for singles the threshold will be increased to $22,398 (up from $21,980 for 2017-18).
• for couples with no children, the family income threshold will be increased to $37,794 (up from $37,089 for 2017-18).
• for single seniors and pensioners eligible for the SAPTO, the Medicare levy low-income threshold will be increased to $35,418 (up from $34,758 for 2017-18).
• the family threshold for seniors and pensioners will be increased to $49,304 (up from $48,385)
• the additional amount of threshold for each dependent child or student will be increased to $3,471 (up from $3,406).