New Tax Rates July 2024: What Changed & How It Affects Your Pay

Last updated: March 2026

The start of the 2024-25 financial year brought significant changes to Australia's income tax system. Whether you're an employee, freelancer, or small business owner, understanding these changes is crucial for managing your finances effectively. In this comprehensive guide, we'll break down exactly what changed in July 2024, compare the old and new tax rates, and show you how these changes impact your take-home pay.

Overview of Tax Changes Effective July 2024

On 1 July 2024, Stage 3 tax cuts came into effect, representing the most substantial overhaul of Australia's personal income tax system in over a decade. These changes were designed to address bracket creep and put more money back into the pockets of Australian workers. The modifications affected tax thresholds, rates, and the overall structure of how income tax is calculated.

The key changes included lowering the 19% tax rate to 16%, reducing the 32.5% rate to 30%, raising the threshold for the 37% rate from $120,000 to $135,000, and increasing the top rate threshold from $180,000 to $190,000. These adjustments meant that most Australian taxpayers would see an increase in their after-tax income, with the benefits distributed across all income levels.

Old vs New Tax Rates: A Detailed Comparison

To fully understand the impact of these changes, let's compare the tax brackets from the 2023-24 financial year with those that took effect in July 2024 for the 2024-25 financial year.

As you can see from the table, the most significant changes occurred in the middle-income brackets. Workers earning between $18,201 and $45,000 benefited from a 3 percentage point reduction in their marginal tax rate, while those earning between $45,001 and $135,000 saw even more substantial savings due to both rate reductions and threshold adjustments.

It's important to note that these tax rates do not include the Medicare levy, which is typically an additional 2% of taxable income for most taxpayers, or the Medicare Levy Surcharge for high-income earners without private health insurance. When calculating your actual take-home pay, these additional charges must be factored in.

Real-World Impact: How Much Extra Will You Take Home?

Understanding the percentage changes is one thing, but seeing the actual dollar impact on your pay packet really brings these changes to life. Let's look at some practical examples of how the July 2024 tax cuts affected Australian workers across different income levels.

For a full-time worker earning the median Australian salary of approximately $65,000 per year, the tax changes resulted in annual tax savings of around $1,055. This translates to roughly $40 extra in their pocket each fortnight—a meaningful amount that can contribute to groceries, fuel, or savings. A higher-income earner on $120,000 saved approximately $2,170 annually, or about $83 per fortnight.

Even part-time workers and those on lower incomes benefited. Someone earning $35,000 per year saved around $515 annually, while those at the top end of the income spectrum also saw reductions in their overall tax burden. The government designed these changes to provide relief across the board while maintaining progressivity in the tax system.

Additional Changes: Superannuation and HECS-HELP

While the income tax changes grabbed most of the headlines, July 2024 also brought adjustments to other areas of the tax and financial system. Understanding these complementary changes is essential for getting a complete picture of your financial position.

The superannuation guarantee rate remained at 11.5% for 2024-25, following the incremental increases that have been occurring over recent years. This rate increased to 12% from July 2025, so employers and employees needed to factor this into their forward planning. The concessional contributions cap for superannuation also increased, allowing workers to make additional tax-advantaged contributions to their retirement savings.

For those with HECS-HELP debts, the indexation rate applied in 2024 was based on the Consumer Price Index (CPI). The compulsory repayment thresholds also saw adjustments, meaning some graduates may have started making repayments at slightly different income levels compared to the previous year. It's always worth checking your repayment obligations if you're near the threshold, as these can change with annual indexation.

Planning Opportunities: Salary Sacrifice and Tax Offsets

With the new tax rates in effect, July 2024 was an ideal time to review your salary packaging arrangements. Salary sacrifice arrangements allow you to redirect part of your pre-tax income toward benefits like additional superannuation contributions, car leases, or electronic devices, potentially reducing your taxable income and overall tax liability.

The interaction between the new tax rates and salary sacrifice became particularly interesting for middle-income earners. With the reduction in marginal rates for many taxpayers, the tax savings from salary sacrificing became relatively less valuable in pure dollar terms, but the strategy remained highly effective for building superannuation balances or accessing benefits with favorable tax treatment.

Additionally, the Low and Middle Income Tax Offset (LMITO) was not extended into the 2024-25 financial year, having ended in 2023-24. This meant that while most taxpayers benefited from the Stage 3 cuts, those who previously relied on LMITO needed to adjust their expectations accordingly. The combination of these factors made personal tax planning more important than ever.

Current Tax Rates: FY 2025-26 Update

As we move through the 2025-26 financial year, the tax rates established in July 2024 remain in effect with some minor adjustments to thresholds due to indexation. The structure that was introduced—simplified brackets with lower rates for middle-income earners—continues to shape how Australians are taxed on their income.

For the most accurate and up-to-date calculations of your specific tax position, we recommend using our online calculators. These tools account for all current rates, including the Medicare levy, superannuation contributions, and any HELP debts you may have, giving you a precise picture of your financial situation.

Conclusion: Making the Most of the New Tax Landscape

The tax rate changes that took effect in July 2024 represented a significant shift in Australia's approach to personal income taxation. By comparing the old and new rates, it's clear that the government aimed to simplify the system while providing meaningful relief to working Australians across all income levels.

Whether you're budgeting for the year ahead, considering salary packaging options, or simply want to understand how much you'll actually take home each pay period, staying informed about these changes is crucial. The savings from the new tax rates can make a real difference to your household budget, investment capacity, or debt reduction strategy.

For personalized calculations and to explore how these rates apply to your specific situation, use our comprehensive suite of tax and payroll calculators. Understanding your tax position is the first step toward better financial planning and making the most of your hard-earned income.