Personal Income Tax Cuts 2019 – Explained

Depending on your income, the legislation passed by the Government in July will give Australian taxpayers an extra $255 to $1,080. So what does this mean for you?

If you earned:

• Under $37,000 – you will get $255 back.
• Between $37,000 and $48,000 – $255 back plus 7.5% of what is over $37,000 (so that’s between $255 and $1,080).
• Between $48,000 and $90,000 – $1,080 back, flat. 
• Between $90,000 and $126,000 – $1,080 back but minus 3% of what is over $90,000 (so between $1,080 and $0).
• Over $126,000 – zero.

Some examples

A person earning:

• $35,000 gets $255 back
• $45,000 gets $855 back
• $55,000 gets $1,080 back
• $80,000 also gets $1,080 back
• $100,000 gets $780 back
• $120,000 gets $180 back

What if I have already lodged my tax return?

If you’ve already lodged your 2018-19 tax return you will automatically receive any increase you are entitled to. You won’t need to request an amendment.

Will it be around forever?

Under the current legislation, you’ll get the tax cut for 4 years. So it will apply to the tax return for the current year 2018-19 until 2021-22.

What happens after this?

For the 2022–23 income year, the tax rates and tax brackets will change. The top threshold of the 19 per cent personal income tax bracket will increase from $41,000 to $45,000.

The tax rate for an individual whose taxable income:

• exceeds $18,200 but is not more than $45,000 is 19%
• exceeds $45,000 but is not more than $120,000 is 32.5%
• exceeds $120,000 but is not more than $180,000 is 37%
• exceeds $180,000 is 45%
• Increase the low-income tax offset (LITO) from a maximum amount of $645 to $700 per annum.
• Taxpayers with a taxable income which does not exceed $37,500 will receive a LITO of $700.
• Taxpayers with a taxable income which exceeds $37,500 but is not more than $45,000 will receive a LITO of $700, less an amount equal to 5 per cent of the excess.
• Taxpayers with a taxable income which exceeds $45,000 but is not more than $66,667 will receive a LITO of $325, less an amount equal to 1.5 per cent of the excess.

And further ahead?

For the 2024-25 income year, the tax rates and tax brackets will change again. The tax rate for an individual whose taxable income:

• exceeds $18,200 but is not more than $45,000 is 19%
• exceeds $45,000 but is not more than $200,000 is 30%
• exceeds $200,000 is 45%

For further information please click visit the ATO website here.