The government has announced a change to personal income tax rates, increasing the 32.5% rate threshold to $87k.
The low income thresholds for the Medicare levy will also be increased.
From 1 July 2016, the following individual income tax rates* will apply:
Tax on this income
0 – $18,200
$18,201 – $37,000
19% of excess over $18,200
$37,001 – $87,000**
$3,572 plus 32.5% of excess over $37,000
$87,001 – $180,000
$19,822 plus 37% of excess over $87,000
$180,001 and over
$54,232 plus 47% of excess over $180,000
*Excluding 2% Medicare Levy, **As announced in 2016/17 Budget but not yet enacted
Importantly, the government has confirmed that the 2% Temporary Budget Repair Levy will expire at the end of the 2017 income year, returning the effective top marginal tax rate to 45%.
The government has also announced that there will be no increase for indexation to the income thresholds for the Medicare Levy Surcharge and the Private Health Insurance Rebate for a further three years to 1 July 2021.