The stage 3 tax cuts are coming in July, 2024. Under the new rules, the five current tax brackets will be rolled into four instead.
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00:00 [Music]
00:13 Here's how the current tax brackets work. So at the moment there are five tax brackets.
00:20 Each of these buckets represents the five tax brackets. The water in this bucket
00:27 represents a salary of $200,000 a year. So let's see how that's taxed under the current system
00:36 and then how it will change under the stage three cuts. A salary of $200,000. The first $18,200
00:46 is tax-free so it will go into the tax-free bucket. The next $26,800 of the salary is then taxed at
00:56 19%. Then $75,000 of the salary will end up in the 32.5% tax bracket.
01:18 The next fits $60,000 which will be taxed at 37%. And finally the remaining $20,000
01:30 will end up over here and is taxed at 45%.
01:40 But when the stage three tax cuts come into force on July 1st 2024 these two buckets here
01:49 will be joining. Which will mean that amounts ranging from $45,001 to $200,000
02:02 will be taxed at 30%. And it will mean in order to be tipped into this
02:09 45% bucket you will have to be earning more than $200,000 every year.
02:21 So
02:30 yeah.