Australian Income Tax Rates 2024–25: What Individuals and Businesses Need to Know

Key Changes from Previous Years

The most notable adjustments include the reduction of the 32.5% tax bracket to 30%, providing immediate relief for a significant portion of Australian taxpayers. Additionally, the 37% tax bracket threshold has increased from $120,000 to $135,000, and the top 45% bracket now applies from $190,000 instead of $180,000.

These modifications ensure that taxpayers across various income levels benefit from reduced tax liabilities. For example, someone earning $80,000 will save approximately $1,679 compared to the previous year’s tax obligations when they calculate their taxable income tax.

Medicare Levy and Surcharge Updates

The standard Medicare Levy remains at 2% of your taxable income for eligible Australian residents. However, the Medicare Levy Surcharge thresholds have increased for 2024–25, with single taxpayers now exempt from the surcharge if their income is $97,000 or less, up from $93,000 in the previous year.

For families, the threshold increases to $194,000, with an additional $1,500 for each dependent child after the first. The surcharge rates remain tiered at 1%, 1.25%, and 1.5% depending on your income level.

Individual Income Tax Brackets for 2024–25

Australia’s progressive tax system ensures you only pay higher rates on income that exceeds specific thresholds. This means your entire income isn’t taxed at your highest bracket rate – only the portion that falls within each bracket.

The tax-free threshold remains at $18,200, meaning you pay no income tax on your first $18,200 of earnings. Beyond this threshold, the rates apply progressively to different portions of your assessable income.

Current Tax Brackets and Rates

Understanding how Australia’s progressive tax system works is essential for calculating your tax liability. The following table shows the current tax rates that apply to different portions of your taxable income for the 2024–25 financial year. Remember, you only pay the higher tax rate on income that falls within each specific bracket, not on your entire income.

These rates don’t include the Medicare Levy or any applicable tax offsets such as the Low-Income Tax Offset.

Practical Tax Calculations

To illustrate how the progressive system works, consider someone earning $60,000 annually. Their tax calculation would be calculated as: $0 on the first $18,200, $4,288 on income between $18,201 and $45,000, and $4,500 on income between $45,001 and $60,000, totalling $8,788 before offsets and the Medicare Levy.

This progressive approach ensures fairness across income levels while providing predictable tax obligations for financial planning purposes. Understanding how much tax you’ll pay helps you plan your finances effectively throughout the income years.

Business and Company Tax Rates

Australian companies face a two-tier tax system designed to support smaller businesses while ensuring larger corporations contribute appropriately. Understanding which company tax rate applies to your business is essential for accurate tax planning and compliance.

The system distinguishes between a base rate entity eligible for the lower company tax rate of 25% and other companies subject to the full company tax rate of 30%. This classification depends on specific turnover and income composition requirements that change annually based on your company’s circumstances.

Base Rate Entity Requirements

To qualify for the 25% company tax rate, your business must meet two critical criteria throughout the 2024–25 income year. First, your company’s aggregated turnover must be less than $50 million, including income from all related entities if you operate multiple businesses or have complex corporate structures.

Second, no more than 80% of your company’s assessable income can consist of base rate entity passive income. This passive income includes dividends (except where you hold 10% or more voting power), interest income, rent and royalties, net capital gains, and certain trust distributions.

Company Tax Rate Structure

These rates apply for the entire 2024–25 financial year, with franking rates aligned accordingly for dividend distributions:

Recent Changes Affecting Businesses

Global Anti-Base Erosion rules now apply to multinational groups with consolidated revenue exceeding €750 million, introducing a 15% domestic minimum tax from 2024–25. Additionally, foreign resident Capital Gains Tax changes increase withholding tax rates from 12.5% to 15% from July 2025, with the previous $750,000 threshold removed entirely.

The instant asset write-off threshold remains at $20,000 for businesses with turnover under $10 million, extended until 30 June 2025 and promised to continue into 2025–26. This allows eligible businesses to claim immediate deductions for certain assets.

PAYG Withholding and Superannuation Updates

Pay As You Go (PAYG) withholding ensures employees contribute to their tax obligations throughout the year rather than facing large bills at tax time. Your employer must use the latest Australian Taxation Office tax tables to calculate correct withholding amounts and avoid compliance penalties.

PAYG withholding applies to various payment types, including wages, salaries, commissions, bonuses, and payments to contractors who don’t provide an Australian Business Number. The withholding rates align with the individual tax brackets outlined earlier, ensuring consistency across the tax system.

PAYG Compliance Requirements

Employers must report PAYG withholding through Single Touch Payroll or Business Activity Statements, depending on their business size and reporting frequency. Monthly reporting typically applies to larger businesses, while quarterly reporting suits smaller operations.

Failure to meet PAYG withholding obligations can result in Australian Taxation Office penalties, compliance audits, and potential legal consequences. Businesses that fail to withhold, report, or remit PAYG tax correctly may face fines, interest charges, and additional tax liabilities.

Superannuation Guarantee Updates

The Superannuation Guarantee rate increases from 11% to 11.5% for the 2024–25 financial year, with the final increase to 12% scheduled for 1 July 2025. This represents the penultimate step in the progressive increases that began in 2021.

Employers must update their payroll systems to reflect the new 11.5% rate and ensure timely quarterly contributions to avoid Superannuation Guarantee Charge penalties. The charge includes interest and administration fees, plus superannuation contributions calculated at 12% of salary and wages.

Tax Offsets and Additional Considerations

Several tax offsets remain available to reduce your tax payable for 2024–25, with the Low-Income Tax Offset being the most significant for eligible taxpayers. These offsets directly reduce the tax you owe and can substantially impact your final tax liability.

The Low Income Tax Offset provides up to $700 for Australian residents with taxable income under $66,667, automatically calculated when you lodge your tax return. This offset reduces your tax payable to zero but cannot create a refund beyond what was withheld during the year.

Low Income Tax Offset Structure

The offset calculation ensures gradual reduction as income increases, providing the most benefit to lower-income earners while maintaining incentives to increase earnings.

Fringe Benefits Tax Implications

Fringe Benefits Tax remains at 47% for the 2024–25 FBT year (ending 31 March 2025), aligned with the top individual marginal tax rate plus Medicare Levy. Employers providing benefits with a taxable value exceeding a certain amount of $2,000 must report grossed-up values on employee payment summaries.

The gross-up rates remain unchanged at 2.0802 for Type 1 benefits (GST creditable) and 1.8868 for Type 2 benefits (non-GST creditable). These rates ensure the FBT calculation reflects the pre-tax income equivalent of the benefit provided.

Capital Gains Tax Considerations

Capital gains continue to be taxed at your marginal tax rate, with the 50% discount available for assets held longer than 12 months. Individual taxpayers benefit from effective Capital Gains Tax rates ranging from 9.5% to 23.5% when the discount applies, while companies receive no discount regardless of holding period.

For foreign residents, Capital Gains Tax withholding increases to 12.5% of the purchase price for property sales, with this amount credited against your final Capital Gains Tax liability upon lodging your Australian tax return.

Important Deadlines and Compliance Dates

Meeting tax deadlines is crucial for avoiding penalties and maintaining good standing with the Australian Taxation Office. The key dates for 2024–25 vary depending on whether you prepare your own return or use a registered tax agent.

Individual taxpayers preparing their own returns must lodge by 31 October 2025, while those using registered tax agents benefit from extended deadlines. These extensions provide additional time for thorough preparation and accurate reporting.

Key Lodgment Deadlines

Business Activity Statement lodgments continue monthly or quarterly depending on your business size, with consistent 21st of the month deadlines for monthly lodgers.

Understanding these deadlines helps you plan effectively and avoid the stress of last-minute preparation. Working with experienced tax professionals ensures you meet all obligations while maximising available deductions and offsets.

Planning for Success

The 2024–25 financial year represents a significant opportunity for tax savings across most income levels. By understanding these rates, staying organised with your records, and seeking professional advice when needed, you can understand the tax system confidently and ensure you’re not paying more than necessary.

For example, understanding your eligibility for various offsets and deductions can significantly impact your final tax liability. Whether you’re earning dividends from investments, receiving interest from savings, or operating a business in Australia, knowing the applicable rates helps you make informed financial decisions.

Remember that tax laws can be complex, and individual circumstances vary significantly. The Australian Taxation Office website provides detailed information and resources, but professional guidance helps ensure you’re making the most of available opportunities while meeting all your obligations. Taking the time to understand how much tax you’ll pay and when you need to pay it sets you up for financial success throughout the year.