Navigating the 2023 and 2024 FY Australian Tax Brackets
Taxes are an inevitable part of life, and for Australian residents, understanding the tax brackets is crucial for accurate financial planning. The 2023 FY tax brackets, applicable for the financial year 2022-2023 and the 2024 FY tax brackets, applicable for 2023-2024, are the same, offering stability and predictability for taxpayers. The 2025 FY however will encompass phase 3 tax cuts, which should be considered now to maximise your benefit. We cover planning for phase 3 cuts in more detail here, have a look and see what you could do today to benefit tomorrow.
Understanding Taxable Income
Before delving into the tax brackets, it's essential to understand the concept of taxable income. Taxable income is the amount of income remaining after subtracting eligible deductions from your gross income. Gross income encompasses all your earnings, including salary, wages, investments, and rental income.
2023 and 2024 Australian Tax Brackets for Residents
| Taxable Income | Tax On This Income |
|---|---|
| $0 - $18,200 | Nil |
| $18,201 - $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 - $120,000 | $5,092 + 32.5 cents for each $1 over $45,000 |
| $120,001 - $180,000 | $29,467 + 37 cents for each $1 over $120,000 |
| $180,001 and over | $51,667 + 45 cents for each $1 over $180,000 |
NOTE: Be sure to read about the phase 3 tax cuts for the 2025 FY to see how you can plan ahead.
Tax-Free Threshold
The tax-free threshold is the amount of income you can earn before you start paying income tax. For the 2023 and 2024 financial years, the tax-free threshold for Australian residents remains $18,200.
Calculating Tax Payable
To calculate your tax payable, you'll need to determine your taxable income and apply the relevant tax rates from the tax brackets. The tax rates are progressive, meaning the higher your taxable income, the higher the percentage of tax you'll pay.
Tax Offsets and Incentives
In addition to tax brackets, there are various tax offsets and incentives available to eligible taxpayers. These include:
Low and middle-income tax offset (LMITO): This offset provides a reduction in tax payable for individuals with taxable incomes between $48,000 and $90,000.
Seniors and pensioners tax offset (SAPTO): This offset provides a tax reduction for eligible seniors and pensioners.
Zone tax offset (ZTO): This offset provides a tax reduction for individuals living in prescribed remote areas of Australia.
Seeking Professional Guidance
While understanding the tax brackets is essential, consulting a qualified tax accountant can provide personalized guidance and ensure you're taking advantage of all available tax benefits. They can help you navigate the complexities of the Australian tax system and maximise your tax savings.
The 2023 Australian tax brackets provide a clear framework for determining your tax liability. By understanding the tax brackets, tax-free threshold, and available tax offsets, you can make informed financial decisions and minimize your tax burden. Remember, seeking professional guidance from a qualified tax advisor can prove invaluable in making the best of your financial planning.