The Federal Government’s revised Stage 3 tax cuts passed Parliament on Tuesday night.
The tax cuts will come into effect on 1 July, after passing the Senate with the support of the Opposition.
Here’s a refresher on Stage 3 and what it means for you.
Australia’s tax system
Australians pay more tax as they earn more. Every dollar earned above $18,200 is taxed.
The Morrison Government legislated Stage 3 tax cuts in 2019, meaning earnings between $45,000 and $200,000 would be taxed at a lower rate (of 30%). Under the plan, lower-income earners would not receive a tax cut.
Labor committed to keeping these tax cuts when it won the 2022 election. The changes were due to come into effect in July.
Stage 3 tax cuts
In January, the government announced changes to Stage 3 to include tax cuts for lower incomes.
Under the revised cuts, earnings between $18,200 and $45,000 will be taxed at 16 cents per dollar, down from 19 cents.
Earnings above $135,000 won’t get the reduced tax rate promised under the original Stage 3 proposal.
Albanese said the new proposal will benefit an additional 2.9 million people.
Try our stage 3 tax cuts calculator here.
Stage 3 tax clear Parliament
The Coalition announced it would support the legislation earlier this month. Opposition Leader Peter Dutton said he “will not stand in the way of providing support to Australians doing it tough”.
The bill passed the Lower House and was approved by the Senate overnight.
Amendments to the legislation were put forward by the Coalition and Greens, but were voted down. The legislation will now go to the Governor-General to sign into law.
