Firstly the top income tax bracket is 45% not 47% as stated and that wont be changing under the full govt plan. What will change is that its starting point has moved up from 180k to above 200k.
The final stage that kicks in on 1July,2024, thats six years away removes the 37% bracket and replaces it with one mammoth 32.5% that runs from income of $41,000-$200,000. So someone on $41,000 will be paying the same rate of tax as someone on $200,000 with the net result being the $41000 will get in dollar terms a piddly cut while those on $200,000 income will get an extra $7225. I guess that means everyone over $200,000 will get $7,225 while those earning up to $90,000pa will get between about $500 and a max of $665 a year for someone on $90,000.
Most Australians will get the lowest amount of around $500 a year translating to about $10 a week.
The $200,000 and above crowd will pocket $7225 translating to about $139 extra a week. Good to be in this group!
"Phase three only benefits upper-middle and high earners
Phase three, which would kick in on July 1, 2024, is the centrepiece of the plan and the biggest change to the current system.
It simply removes the 37 per cent tax bracket from the system, creating one giant middle tax bracket of 32.5 per cent for income between $41,000-$200,000.
That move doesn't give any additional tax relief to anyone earning $120,000 a year or less, but gives a steadily increasing tax break for everyone above that level until it tops out at the new top tax threshold of $200,000 where the 45 per cent tax rate kicks in.
The biggest beneficiary of this is anyone earning $200,000 a year or more, who gets 4.5-cents-in-the-dollar tax relief on earnings between $120,001-$180,000 and a 12.5-cents-in-the-dollar tax cut on income between $180,001-$200,000, adding $7,225 a year to their take-home income.”
