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Personal Income Tax Rates

Brief Story

Income tax on personal income is a progressive tax. The rate for resident individual taxpayers is different to non-resident taxpayers. Since the 2012/2013 financial year, the tax-free threshold increase to $18,200 from $6,000 and applied to Australian residents. Since the introduction the Medicare levy in February 1984, the rate has been progressively increased from 1% to 1.25 % in December 1986, to 1.40% from July 1993 to 1.50% from July 1995 and 2% from July 2014 until now.
In the 2017/2018 Federal Budget, the coalition government announced the Personal Income Tax Plan, one of this was a seven-year plan of income tax cuts. Subsequently, the plan became law on 21 June 2018. There were no changes to personal income tax rates (Australia tax brackets) for 2017/2018 and tax-free thresholds in the 2017-2018 Federal Budget. The three-year Temporary Budget Repair Levy (TBRL) of 2% for individuals with a taxable income of over $180,000 (announced in the 2014-15 Federal Budget) ceased on 30 June 2017.

In the 2018/2019 federal budget, the government introduces a temporary low and middle-income tax offset in addition to the existing Low Income Tax Offset (LITO). The offset will be applied from 2018/2019 to 2021/2022 financial year but this offset will depend on the taxpayer’s relevant income level.
The table below outlines marginal tax rates and income brackets for 2017/2018 and 2018/2019 financial years. The marginal rates from 2018/2019 will be applied up to 2021/2022 financial year.
Individual income tax rates for 2017/2018 (residents) Taxable income Tax on this income Effective tax rate
$1 – $18,200 Nil 0%
$18,201 – $37,000 19c for each $1 over $18,200 0 – 9.65%
$37,001 – $87,000 $3,572 plus 32.5c for each $1 over $37,000 9.65 – 22.78%
$87,001 – $180,000 $19,822 plus 37c for each $1 over $87,000 22.78 – 30.13%
$180,001 and over $54,232 plus 45c for each $1 over $180,000 30.13 – less than 45%
Source: ATO
The temporary budget repair levy, which was introduced by the Liberal-National coalition Government under Prime Minister Abbott in financial year 2014/15 and payable at a rate of 2% for incomes over $180,000, ceased to apply on 1 July 2017.
Individual income tax rates for 2018/2019 (residents) Taxable income Tax on this income Effective tax rate
$1 – $18,200 Nil 0%
$18,201 – $37,000 19c for each $1 over $18,200 0 – 9.65%
$37,001 – $90,000 $3,572 plus 32.5c for each $1 over $37,000 9.65 – 23.11%
$90,001 – $180,000 $20,797 plus 37c for each $1 over $90,000 23.11 – 30.05%
$180,001 and over $54,097 plus 45c for each $1 over $180,000 30.05 – less than 45%
Source: ATO
The above rates do not include:
• The Medicare levy of 2%
• The low-income offset, which effectively increases the tax-free threshold to $20,543.

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