How your income will change next week
Millions of Australian workers will see the impact of Stage 3 tax cuts in their next pay packet
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Stage 3 tax cuts will commence on Monday, providing 13.6 million workers with tax savings that they will see in their first pay packets of FY25. The average Australian wage earner on $74,500 per year will receive a $1,540 tax saving over the new financial year. The Superannuation Guarantee is also going up from 11 percent to 11.5 percent from Monday, providing the same worker with a $372 bump per annum to the superannuation payments they receive from their employer.
The Albanese Government amended the Stage 3 tax cuts in January to give every taxpayer a tax cut rather than only those on higher incomes. Many economists have argued the tax cuts will add to inflation, which is proving to be remarkably sticky. Yesterday, the Australian Bureau of Statistics released the May inflation figures showing a 4 percent annual increase in inflation, up from 3.6 percent in April.
The Federal Government decided to amend the legislated tax cuts in January to help more Australians with rising cost of living pressures. Official advice from the Federal Treasury said the amendments were “broadly revenue neutral” because they would cost almost the same amount as the original Stage 3 plan, which had already been factored into inflation forecasts. The amendments reduced the tax break for earners at the top end to enable tax relief for everyone. A Treasury document said the changes “will not add to inflationary pressures and will support labour supply”.
The tables below outline how the tax rates and tax brackets will change from Monday.
At a press conference after the Reserve Bank announced interest rates would remain on hold last week, Governor Michele Bullock said she expects some people would use their tax cuts to cover everyday expenses while others would save it.
“What we do observe in the data is that people who have mortgages – on average, not all – but people on average who have mortgages tend to try and put more into their offset accounts and their redraw facilities because they’re paying quite a high interest rate now on their mortgage and so they want to offset it,” she said.
A Westpac survey found Australians planned to save up to 80 cents for every $1 of tax savings.
“The results suggest consumers will use tax relief as an opportunity to repair their finances and rebuild saving buffers rather than spend,” said senior Westpac economist Matthew Hassan.
If taxpayers followed through on this plan, Mr Hassan said only $4.7 billion of the $23.3 billion in tax relief would be spent, equating to a spending boost of 35 basis points.
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More than one fifth of Australians are cutting back on the number of people they socialise with
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Australian social circles are shrinking as more people look for ways to keep a lid on spending, a new survey has found.
New research from Finder found more than one fifth of respondents had dropped a friend or reduced their social circle because they were unable to afford the same levels of social activity. The survey questioned 1,041 people about how increasing concerns about affordability were affecting their social lives. The results showed 6 percent had cut ties with a friend, 16 percent were going out with fewer people and 26 percent were going to fewer events.
Expensive events such as hens’ parties and weddings were among the activities people were looking to avoid, indicating younger people were those most feeling the brunt of cost of living pressures. According to Canstar, the average cost of a wedding in NSW was between $37,108 to $41,245 and marginally lower in Victoria at $36, 358 to $37,430.
But not all age groups are curbing their social circle. While the survey found that 10 percent of Gen Z respondents had cut off a friend, only 2 percent of Baby Boomers had done similar.
Money expert at Finder, Rebecca Pike, said many had no choice but to prioritise necessities like bills over discretionary activities.
“Unfortunately, for some, social activities have become a luxury they can no longer afford,” she said.
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