Introduction
Across the 2024-25 income year and beyond, major tax reforms in Australia aim to ease cost-of-living pressures, simplify brackets, and refocus the tax burden. Many of the changes reflect the Australian Taxation Office (ATO) and government priorities around fairness, labour market participation, and better alignment of tax with modern economy dynamics.
1. Personal income tax changes
1.1 Reshaping the so-called “Stage Three” cuts
Originally passed by the previous government as the “Stage Three” income-tax cuts, the reforms were modified by the Treasury of Australia under the Anthony Albanese government in early 2024.
Under the revised plan:
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The tax rate for the $18,201–$45,000 bracket will reduce (from 19 % under the prior structure) to 16% initially.
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The $45,001–$135,000 bracket will be taxed at 30% rather than the flattened 30% up to $200,000 under the earlier version.
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Thresholds for the higher tax brackets remain at 37% and 45% but have been adjusted (e.g., 37% applies above $135,000, 45% above $190,000).
These changes took effect from 1 July 2024 for the new income-year tax settings.
1.2 Further cuts in the future (planned)
The government has announced that from 1 July 2026 the 16 % bracket (for incomes between $18,201–$45,000) will reduce to 15 %, and then to 14 % from 1 July 2027.
According to the Budget fact-sheet: by 2027-28, many taxpayers will see a tax cut of up to ~$536 (annualised) relative to 2024-25 tax settings.
1.3 Other individual-tax measures
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From 1 January 2025, the foreign resident capital gains withholding (FRCGW) rate increased to 15% and the threshold for withholding was removed.
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From 1 July 2025, taxpayers will no longer be able to claim tax deductions for general interest charges (GIC) and shortfall interest charges (SIC). The recommendation is that any amounts owing be settled before 30 June 2025.
2. Tax cuts as cost-of-living relief
The government has emphasised that the tax changes are designed to ease pressure on households, support labour supply (especially among women and part-time workers), and maintain the tax-to-GDP ratio at sustainable levels.
For example:
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The combined tax cuts are estimated to lift nominal household disposable income by about 1.9 % by 2027-28 compared with 2023-24 settings.
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Workers on average earnings (around $79,000) could receive annualised tax savings of around $1,654 in 2024-25 and up to ~$2,190 by 2027-28 (on top of earlier cuts).
3. Business & other tax-policy changes
3.1 Critical-minerals & hydrogen tax incentives
Beyond personal income tax, the government has introduced targeted tax incentives for strategic industries. For instance, a law passed in early 2025 gives a tax deduction of 10% of processing and refining costs for certain critical minerals from 2028 to 2040, and a tax incentive of A$2 per kilogram of renewable hydrogen produced.
These measures reflect a shift to using tax policy to encourage investment in the transition to net zero emissions and help develop Australia’s domestic processing capacity of key minerals.
3.2 Corporate-tax reform proposals
While not yet finalised, the Productivity Commission has recommended reducing the company tax rate to 20% for firms earning under certain thresholds (with the largest firms unaffected) as part of a broader push for productivity and investment growth.
3.3 Superannuation tax-concession changes
There have also been proposals (and revisions) to how superannuation tax concessions apply for high-balance funds (over $3 million). These are politically contentious and may affect corporate and personal law-advisory settings.
In sum, Australia’s tax landscape in the recent year has shifted meaningfully. For individuals, the message is clearer: lower tax rates for many, particularly in lower income brackets, and fewer deductions in some cases. For businesses and accounting/legal advisors, the interplay of new incentives, deduction removals, and future-facing reforms demands pro-active planning and monitoring.
