The revised Stage 3 tax cuts took effect on 1 July 2024, and every Australian taxpayer earning above the tax-free threshold got a cut. Two further cuts are now legislated for 2026-27 and 2027-28. Here is what actually changed and what it means for your pay.
What changed on 1 July 2024
The 2024-25 year reshaped the resident tax 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% bracket threshold rose from $120,000 to $135,000.
- The 45% bracket 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 too. You can see the year-by-year rates side by side on the Income Tax Cuts page.
What you save
The saving compared with the old (pre-July 2024) rates grows with income until it plateaus:
- Around $40,000: roughly $650 a year.
- Around $73,000: roughly $1,500 a year.
- Around $100,000 and above: roughly $2,179 a year.
You can check the exact figure for your salary with the Salary Tax Calculator, and compare a salary across years on the historical pages — for example $80,000 after tax in 2023-24 versus $80,000 after tax today.
What happens next: more cuts in 2026-27 and 2027-28
The 2025 Federal Budget added two more cuts to the lowest rate:
- From 1 July 2026 (2026-27), the 16% rate falls to 15%.
- From 1 July 2027 (2027-28), it falls again to 14%.
These apply to the $18,201–$45,000 band, so they are worth up to a few hundred dollars a year and reach every taxpayer above the tax-free threshold. The tax cuts page shows each year's rates and what the change is worth.
Does any of this change my super?
No. Income tax cuts do not touch superannuation. Your employer still pays the super guarantee (12%) on top of your salary, regardless of the income tax rates. If you want to use a cut to get ahead, directing a little extra into super or an offset account can be more valuable than spending it — see the Salary Sacrifice Super Calculator.
A worked example
Take someone on $100,000, comparing the old pre-July-2024 rates with the Stage 3 rates:
- Old rates: income tax of about $22,967.
- Stage 3 rates: income tax of about $20,788.
- Saving: about $2,179 a year, or roughly $42 a week.
You can reproduce this for any salary by switching the year in the Salary Tax Calculator, or compare a salary across years on the historical after-tax pages.
Who benefits most
Because the cut reaches the lower brackets, the dollar saving rises with income until it plateaus once you earn above about $100,000 — everyone above that point gets the same roughly $2,179. As a share of income, lower and middle earners get the bigger proportional boost.
Why the cuts matter: bracket creep
Tax brackets do not automatically move with inflation. As wages rise, more of your income is taxed in higher brackets even when your spending power has not really improved — this is "bracket creep" or fiscal drag. Periodic cuts like Stage 3, and the further reductions in 2026-27 and 2027-28, hand some of that back. It is also why it pays to keep an eye on salary sacrifice and other ways to manage your taxable income — see the Salary Sacrifice Super Calculator.