Although it came as no great surprise given National campaigned on this issue, one of the biggest wins for earners in this year’s budget was the adjustment of tax thresholds for personal income tax. This long-awaited change to income tax brackets – the first in 14 years – means earners will get to keep more of their income from 31 July 2024.
Income tax threshold changes
The personal income tax threshold changes are as follows:
Because the changes come into effect from the end of July this year, individual taxpayers will have ‘composite’ tax rates for their 2024-25 tax returns, which take into account the different tax rates during the year.
Tax credit eligibility extended
The independent earner tax credit of up to $20 per fortnight is currently only available to those earning between $24,000 and $48,000. The threshold for this will be extended to those who earn up to $70,000 from 31 July this year.
The full credit will be available to those earning between $24,000 to $66,000, with entitlements gradually reducing as income increases, up to the limit of $70,000.
More support for families
There will also be an increase to the in-work tax credit, which is a tax credit for families with dependent children who are normally in paid work. The increase of $50 per fortnight (which gradually reduces as family income rises) will further support low-to-middle-income working households.
And there’s a new FamilyBoost payment on the way, which will support an estimated 100,000 families with the costs of early childhood education by up to $150 per fortnight.
Want to know exactly what the changes mean for you?
There’s a handy calculator on the Budget 2024 website, which tells you exactly how much more you’ll be eligible for from 31 July when the changes come into force.
Use the Budget 2024 tax calculator
Is your business ready for these tax changes?
If you are an employer, your PAYE and ESCT deductions will change for pay periods beginning on or after 31 July 2024. We recommend checking your payroll system is ready for these changes prior to completing the first pay run after this date.
