Australian Tax Brackets 2024-25 Explained
The 2024-25 financial year (1 July 2024 – 30 June 2025) brought significant changes to Australia's income tax brackets, including a new 16% rate replacing the old 19% rate.
2024-25 Tax Rates for Residents
| Taxable Income | Tax Rate | Tax on This Income |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 plus 37c for each $1 over $135,000 |
| $190,001+ | 45% | $51,638 plus 45c for each $1 over $190,000 |
What Changed?
The Stage 3 tax cuts (revised) took effect from 1 July 2024. The old 19% rate was reduced to 16%, the 32.5% rate was reduced to 30%, and the $120,000 threshold was raised to $135,000. The 37% bracket now starts at $135,001 (was $120,001) and the 45% bracket starts at $190,001 (was $180,001).
Low Income Tax Offset (LITO)
In addition to the tax brackets, eligible taxpayers receive the LITO of up to $700, which phases out between $37,500 and $66,667. This effectively makes the first ~$21,884 tax-free for low-income earners.
How to Use This Guide with the Australian Salary Calculator
Understanding your tax bracket is only the first step — to see exactly how much tax you’ll pay on your actual income, use our Australian Salary Calculator. The calculator automatically applies the 2024-25 tax brackets, including the updated 16% rate for the $18,201–$45,000 band, and calculates your net pay after tax, Medicare levy, and HECS-HELP repayments. Simply enter your annual gross income, and the tool generates an itemised breakdown of your take-home pay, marginal tax, and total deductions. This is especially useful for comparing job offers, planning salary packaging, or estimating your annual tax return outcome. The calculator also accounts for the Low Income Tax Offset (LITO) where applicable, giving a more accurate reflection of your real-world tax liability.
Impact of the 2024-25 Tax Cuts on Different Income Levels
The revised Stage 3 tax cuts have delivered meaningful relief across most income brackets, but the benefits vary significantly depending on your earnings. For example, someone earning $50,000 pays $1,592 less tax in 2024-25 compared to the prior year — a reduction of over 16%. Meanwhile, a high earner on $150,000 saves around $1,110 due to the higher $135,000 threshold for the 37% bracket. Notably, while the top 45% rate remains unchanged, the higher $190,001 threshold (up from $180,001) means more income is taxed at 37% before hitting the top rate. These changes collectively improve take-home pay across the board, with the greatest relative benefit for middle-income earners. For precise savings estimation tailored to your situation, try our Salary Calculator AU tool.
Understanding Marginal Tax Rates
A common misconception is that moving into a higher tax bracket means all of your income is taxed at the higher rate — this is not the case. Australia uses a marginal tax system, where only the portion of income above each threshold is taxed at the corresponding rate. For example, if you earn $50,000, the first $18,200 is tax-free, the next $26,800 ($18,201–$45,000) is taxed at 16%, and the remaining $5,000 ($45,001–$50,000) is taxed at 30%. This results in a total tax of $4,288 (16% of $26,800) plus 30% of $5,000 ($1,500), equalling $5,788. Your effective tax rate (total tax ÷ total income) is therefore only ~11.6%, even though your marginal rate is 30%. Understanding marginal tax helps with financial planning, such as deciding whether to claim additional deductions or adjust superannuation contributions.
Medicare Levy and Surcharge Implications
Most Australian taxpayers also pay the Medicare levy — 2% of taxable income — in addition to income tax. However, low- and middle-income earners may qualify for a reduced or full exemption. For the 2024-25 year, individuals with taxable income below $24,276 pay no Medicare levy, and those earning between $24,276 and $31,042 pay a reduced rate on a sliding scale. Above $31,042, the full 2% applies unless exempt (e.g., for certain overseas residents or those without Medicare eligibility). Additionally, high-income earners (individuals earning over $90,000, couples/families over $180,000) may face the Medicare levy surcharge (MLS) of 1–1.5% if they lack appropriate private hospital cover. This surcharge is designed to encourage private health insurance uptake and is calculated separately from income tax. When using our salary calculator, all these levies are automatically applied based on your income and circumstances.
HECS-HELP Repayments and Interaction with Tax Brackets
HECS-HELP debt repayments are calculated as a percentage of your taxable income, not your take-home pay, and begin once your income exceeds the minimum repayment threshold of $51,550 (2024-25). The repayment rate starts at 1% and increases incrementally up to 10% for incomes of $156,666 or more. Notably, while the tax brackets changed in 2024-25, the HECS-HELP thresholds remain unchanged from the previous year — a key detail when planning repayments. For example, someone earning $60,000 will pay 2% of $60,000 ($1,200) toward their HECS-HELP debt on top of their income tax. Because HECS repayments are calculated before tax offsets like LITO are applied, they can indirectly affect your net cash flow more than expected. Our Australian Salary Calculator includes up-to-date HECS-HELP thresholds and rates, helping you see exactly how your debt interacts with your tax bracket and take-home pay.