Australian income tax rates for 2018/2019

– New tax offset and higher 32.5% tax threshold for 2018/2019 year – Income tax rates for 2018/2019 financial year (subject to legislation)

On 8 May 2018, in the 2018 Federal Budget, the federal government announced new tax relief measures, with some commencing from 1 July 2018 (2018/2019 financial year), subject to legislation.

In this article, you can also find the Australian income tax rates applicable for the 2018/2019 financial year, the 2017/2018 financial year.

Note:

If you’re Age Pension age or older, you may be eligible for a higher tax-free threshold by taking advantage of the Seniors & Pensioners Tax Offset (SAPTO).

The Australian tax financial year runs from 1 July to 30 June of the following year; for example, the 2017/2018 financial year is 1 July 2017 through to 30 June 2018, and the 2018/2019 financial year is 1 July 2018 through to 30 June 2019. The income tax rates for the 2018/2019 year, for the 2017/2018 year and for the 2016/2017 year (and earlier financial years) are set out below.

Note: The primary source for taxpayers on any information relating to tax brackets and individual tax rates is the Australian Taxation Office website (www.ato.gov.au

New tax offset and higher 32.5% tax threshold for 2018/2019

For the 2018/2019 financial year, the federal government announced 3 significant changes to the income tax rules, in the 2018 Federal Budget:

  1. Low and Middle-Income Tax Offset. From 1 July 2018 until 30 June 2022 (for only 4 years), the application of a Low and Middle-Income Tax Offset (LAMITO) for Australians with a taxable income of less than $90,000. The Low Income Tax Offset (LITO) will continue to apply, alongside the LAMITO (for information about LITO, see SuperGuide article LITO: What is the Low Income Tax Offset, and how does it work?). According to the federal government, the LAMITO will provide tax relief of up to $530 a year for affected taxpayers (for more information about LAMITO.
  2. Raising the marginal tax rate threshold for 32.5% tax bracket. From 1 July 2018, raising the marginal tax threshold for the 32.5% tax bracket to $90,000 (from $87,000). Note that this tax threshold was also raised from 1 July 2016 to $87,000 (from $80,000).
  3. Medicare levy will remain at 2%. Previously, the federal government had announced that the Medicare levy would increase to 2%, and the additional 0.5% would be directed to the National Disability Insurance Scheme. The increase to 2.5% is no longer going ahead and the federal government is funding NDIS from consolidated revenue

Income tax rates for 2018/2019 financial year (subject to legislation)

The tax-free threshold is the first $18,200 of your income. You can earn up to $20,542 before any income tax is payable, when taking into account the Low-Income Tax Offset. For those earning under $125,333, a Low and Middle-Income Tax Offset (LAMITO) will also be available, with those Australians on a taxable income of between $48,000 and $90,000 receiving the maximum LAMITO of $530.

For the 2018/2019 year, your top marginal rate of income tax rate can be 0%, 19%, 32.5%, 37% or 45% (plus Medicare levy).

Note: For the 2018/2019 year, the 37% marginal tax rate takes effect when your taxable income exceeds $90,000. For the 2017/2018 year, the 37% marginal tax rate takes effect when your taxable income exceeds $87,000. For previous financial years (before July 2016), the threshold for the 37% tax rate is $80,000.

Income tax rates for 2018/2019 financial year (subject to legislation)

Income Marginal tax rate:

  • $0-$18,200 0%
  • $18,201- $37,000 19%
  • $37,001-$90,000 32.5%
  • $90,001-$180,000 37%
  • $180,001 and above 45%

Source: Adapted from information on the ATO website (www.ato.gov.au).

* You can earn up to $20,542 before any income tax is payable, when taking into account the Low-Income Tax Offset (LITO). For those earning under $125,333, a Low and Middle-Income Tax Offset (LAMITO) will also be available, of up to $530 (subject to legislation).

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