Stage 3 Tax Cuts — How Much More You Take Home

What Changed — Original vs Revised Plan

The Stage 3 tax cuts were originally legislated in 2019 as part of a three-stage plan. The original design collapsed three tax brackets into two, creating a single 30% rate from $45,001 to $200,000. In January 2024, the government announced a revised plan that instead reduced the bottom rate from 19% to 16%, kept more brackets, and spread the benefit more widely.

The key differences in the revised plan: the lowest rate dropped from 19% to 16% (benefiting everyone earning $18,201–$45,000), the 30% bracket now extends to $135,000 instead of $120,000, and the 37% bracket was retained (the original plan eliminated it entirely). The 45% threshold moved from $180,001 to $190,001.

Before & After — Tax Savings at Every Income Level

The following table compares the income tax payable under the pre-Stage 3 rates (FY2023-24) versus the revised Stage 3 rates (FY2024-25 onwards). All figures exclude Medicare levy and tax offsets, showing pure income tax only.

Who Benefits Most?

The revised Stage 3 tax cuts deliver benefits across all income levels, but the distribution differs significantly from the original plan:

Low-Income Earners ($18,201 – $45,000)

This group benefits from the reduction in the bottom marginal rate from 19% to 16%. The maximum saving in this bracket is $804 (3% on $26,800). Under the original Stage 3 plan, this group received zero additional benefit. The revised plan delivers the most proportional benefit to low and middle-income earners.

Middle-Income Earners ($45,001 – $135,000)

This group benefits from the 16% rate cut plus the reduction in the second bracket from 32.5% to 30%. For someone earning $90,000, the combined saving is $1,929 per year ($37.10 per week). The 30% bracket also extends to $135,000 (up from $120,000), providing additional savings for those earning $120,001-$135,000 who previously paid 37%.

High-Income Earners ($135,001 – $190,000)

This group receives smaller savings under the revised plan compared to the original plan. The original plan would have applied a flat 30% to incomes up to $200,000, whereas the revised plan retains a 37% bracket from $135,001 to $190,000. The saving at $150,000 is $3,729 — still substantial, but less than the $7,575 that the original plan would have delivered.

Very High-Income Earners ($190,001+)

The top tax rate of 45% now applies from $190,001 (moved from $180,001). This provides a $4,529 annual saving compared to the pre-Stage 3 rates. Under the original plan, the 45% rate would not have applied until $200,001, providing a larger benefit. Use our Take-Home Pay Calculator to see your exact take-home amount under the current rates.

Timeline — How We Got Here

The three-stage plan took six years to fully implement. For a comprehensive history of Australian income tax rates over the decades, see our Tax Bracket History Guide. For upcoming changes, see Tax Changes 2026-27.

Frequently Asked Questions