In an effort to support economic recovery and create jobs, the Government has announced changes to the personal income tax plan. Below is an update on these changes and how they may impact your finances in the future.
Personal Income Tax Plan updates
It has been announced that stage 2 of the Personal Income Tax Plan has been brought forward from 1 July 2022 to 1 July 2020. See the key changes listed below:
- The upper threshold of the 19% personal income tax bracket has increased from $37,000 to $45,000.
- The upper threshold of the 32.5% personal income tax bracket has increased from $90,000 to $120,000.
- The low-income tax offset (LITO) has increased from $445 to $700 (and decreases at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000, and decreases at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667).
- The 32.5% marginal tax rate will reduce to 30%, and the 37% marginal tax rate will cease.
- The upper threshold of the 30% personal income tax bracket will extend to income from $45,000 up to $200,000.
- The lower threshold of the 45% personal income tax bracket will increase from $180,000 to $200,000.
See more updates below:
What do these Personal Income Tax Plan updates mean for you?
There are several changes to individual taxation for the 2020-21 financial year so it is important to understand how these changes may affect you. You may find that you receive more after-tax income compared to previous years. Take time to consider how this benefit can be used to improve your financial wellbeing, both now and in the future.