The Australian Tax Rates 2024-2025

Think about it—what if you could get just a little more in your paycheck each month?

Whether it’s an extra $100 or $1,000, that extra cash could make a world of difference in your day-to-day life.

Thanks to the changes in the 2024-2025 tax rates, that’s exactly what could happen.

For many Australians, these updates mean less tax paid, which translates directly into more money in your pocket.

But how could these changes benefit you? Let’s dive into the details.

Tax Cuts and What They Mean for You

From July 1, 2024, the Australian Taxation Office (ATO) has made changes to the tax rates and brackets that could lower how much tax you pay. That means a little extra breathing room in your budget. And who doesn’t need that, right?

So, how does this actually work?

Tax brackets are divided into ranges based on your taxable income. The more you earn, the higher the percentage of tax you pay on that income. But with the new changes for 2024-2025, the rates have shifted in a way that could put more money back into your bank account.

Here’s the breakdown of the new rates:

• $0 – $18,200: 0% (Yes, that’s right—no tax at all!)

• $18,201 – $45,000: 16% (Down from 19%.)

• $45,001 – $135,000: 30% (Down from 32.5%.)

• $135,001 – $190,000: 37% (Threshold increases from $120,000.)

• $190,001 and over: 45% (Threshold increases from $180,000.)

(Img: Income Tax Rates 2024-25)

So, whether you’re in the lower brackets or earning more, these adjustments make a meaningful impact. You’ll pay less tax on the same income, which means you can keep more of your hard-earned cash.

Company Tax Rates for 2024-2025

For companies, the tax rate now depends on your income level. Base rate entities—those with a lower turnover (under $50 million) and more than 80% of income from active sources—will now benefit from a reduced tax rate of 25%. 

This is down from the previous 27.5% and represents an even greater opportunity for businesses to retain more of their earnings and reinvest for growth.

But there’s more. If your business isn't eligible for the base rate entity discount, the general company tax rate remains at 30%. For most businesses, though, the decrease to 25% should provide significant savings.

Can Businesses Take Advantage of These New Tax Brackets?

The short answer: absolutely.

Small businesses and sole traders are set to benefit significantly from these changes in tax rates. By paying less tax on their profits, business owners can free up more capital to reinvest in their companies. This could mean expanding operations, hiring new staff, or even taking steps to improve your marketing strategy and grow your customer base.

Impact on Sole Traders

As a sole trader, you might be wondering how these tax changes apply to you. Great news—there are some solid benefits.

With the ATO’s updated tax brackets, if your taxable income falls between $18,201 and $45,000, you’ll see a reduction in the tax rate from 19% to 16%. For those earning between $45,001 and $135,000, the tax rate has been reduced from 32.5% to 30%. 

These cuts directly impact your bottom line, leaving you with more of your income to reinvest in your business, save for the future, or simply enjoy.

Additionally, the thresholds for the higher tax rates have shifted, allowing you to earn more before hitting those higher tax brackets. Specifically, the 37% tax rate threshold increased from $120,000 to $135,000, and the 45% tax rate threshold rose from $180,000 to $190,000. 

If you're a growing sole trader, these changes give you more leeway to increase your income without jumping into higher tax brackets too quickly.

Impact on Companies

For companies, the impact of the new tax rates will vary depending on your business structure and income levels. If your business is classified as a base rate entity, you’re likely in for a good deal. 

The lower tax rate of 25% applies to businesses that meet certain conditions, such as having less than $50 million in turnover and more than 80% of your income from active sources (not passive income).

The reduced tax rate is excellent news for businesses aiming to grow and invest in their future. With more of your profits staying in your pocket, you have the opportunity to invest in expanding your business, upgrading technology, or hiring new staff to support growth. 

The savings you make now could be reinvested into areas that will help you stay competitive in the market.

If your business doesn't qualify for the 25% tax rate, don’t worry. The general company tax rate remains at 30%, which still represents a competitive rate compared to many international tax systems. And remember, it's always a good idea to consult with a tax professional to ensure you're taking full advantage of any tax-saving strategies available to your business.

Final Thoughts

The new Australian tax rates for 2024-2025 are a clear win for many people. Lower rates and higher thresholds mean more money stays with you, and you can use it however you see fit—whether that’s for immediate needs, long-term savings, or investments in your future. 

The government is offering you a break, so it’s time to take advantage and make sure you’re getting every cent you deserve.

Don’t let this opportunity slip by. Take a closer look at your finances, plan your next steps, and make the most of these tax changes to create a more financially secure future for yourself and your family. Let's dive and read our more blogs here:

i) Are You Ready for the New Individual Income Tax Rates That Are Now in Effect? ii) Tax Rates For Australian Residents iii) Smart Tax Planning Strategies to Keep More Money in Your Pocket