The revised Stage 3 tax cuts took effect on 1 July 2024, and every resident taxpayer earning above the tax-free threshold got one. Two further cuts to the lowest rate have landed or are legislated since — which means most articles quoting "what Stage 3 saved you" are now quoting a figure two rate cuts out of date.
Here is what changed, what the package is worth today, and what is still coming.
What changed on 1 July 2024
The 2024-25 year reshaped the resident brackets:
- The 19% rate dropped to 16% (income from $18,201 to $45,000)
- The 32.5% rate dropped to 30% (income from $45,001 to $135,000)
- The 37% threshold rose from $120,000 to $135,000
- The 45% threshold rose from $180,000 to $190,000
Because the system is progressive, a cut to a lower bracket flows through to everyone above it. Year-by-year rates sit side by side on the Income Tax Cuts page.
Then the lowest rate was cut twice more
The 2025 Budget added two reductions to the bottom rate:
- From 1 July 2026, the 16% rate fell to 15% — in effect now, for 2026-27
- From 1 July 2027, it falls again to 14%
They apply to the $18,201–$45,000 band, so they reach every taxpayer above the tax-free threshold and are worth the same flat amount to everyone earning above $45,000.
What the package is worth now
Measured against the rates that applied before July 2024, on income tax alone:
| Taxable income | Saved in 2024-25 | Saved now (2026-27) | From 1 July 2027 |
|---|---|---|---|
| $40,000 | $654 | $872 | $1,090 |
| $60,000 | $1,179 | $1,447 | $1,715 |
| $73,000 | $1,504 | $1,772 | $2,040 |
| $100,000 | $2,179 | $2,447 | $2,715 |
| $135,000 | $3,729 | $3,997 | $4,265 |
| $190,000 and above | $4,529 | $4,797 | $5,065 |
The middle column is the one that matters if someone quotes you a Stage 3 figure. At $100,000 the widely repeated saving is $2,179 — that was correct for 2024-25 and is now $2,447, because the bottom rate has come down a further point since.
Against the rates that applied before July 2024
What the cuts are worth to you now
| Rates | Income tax | Saved |
|---|---|---|
| Before July 2024 | $22,967 | — |
| 2026–27 (now) | $20,520 | $2,447 |
| 2027–28 | $20,252 | $2,715 |
Against the pre-July-2024 rates you are keeping
$47.06a week
A further $268 a year arrives on 1 July 2027, when the lowest rate drops again.
Income tax only — the Medicare levy and offsets are unchanged by the cuts and are excluded from both sides. Full take-home in the Salary Tax Calculator.
The saving plateaus above $190,000 because the changes are all to brackets everyone passes through. Once your income clears the top threshold, every extra dollar is taxed at 45% exactly as it was before, so nothing further accrues.
Who benefits most, precisely
This is where the argument usually goes wrong in both directions, because two different true statements point opposite ways.
As a share of your income, the benefit is roughly flat and drifts slightly upward with income — about 2.18% of income at $40,000 and about 2.52% at $190,000.
As a share of the tax you would have paid, it falls sharply — about 21% of the old bill at $40,000, about 12% at $73,000, and about 8.5% at $190,000.
So a lower earner keeps a much larger fraction of what they used to hand over, while a higher earner keeps slightly more of their income and a great deal more in dollars. Both framings are accurate. Neither on its own is the whole picture, and quoting only one is how this debate usually gets conducted.
Why the cuts happen at all: bracket creep
Australian tax brackets are not indexed to inflation. As wages rise, more of your income falls into higher brackets even when your buying power has not improved — bracket creep, or fiscal drag. It raises the average rate you pay without any legislation being passed.
Periodic cuts hand some of it back, which is why the pattern repeats rather than resolving. A cut that looks generous in the year it lands is partly returning ground given up since the last one. It is also why the 2026-27 and 2027-28 reductions were framed as ongoing relief rather than a one-off.
The practical consequence: a pay rise that merely matches inflation can still leave you paying a higher average rate than the year before. That is worth remembering when a rise looks smaller in your account than on paper.
Does any of this touch super?
No. Income tax cuts do not change superannuation. Your employer still pays the super guarantee of 12% on top of your salary whatever the income tax rates are.
There is an indirect effect worth knowing though. Salary sacrificing into super is taxed at a flat 15% contributions tax, so the benefit of sacrificing is the gap between your marginal rate and that 15%. When your marginal rate falls, that gap narrows slightly — so the cuts make salary sacrifice marginally less powerful, not more. It remains worthwhile well down the income scale, but the arithmetic moved. Run it in the Salary Sacrifice Super Calculator.