What the FY25 Federal Budget means for individuals and families
Understanding the tax and financial implications of Australia’s Federal Budget 2024/2025
Budget night has officially been and gone. But what does it mean for you and your family? The good news is that this year’s budget presented no surprises – almost everything that was presented had been revealed well before budget night, apart from the additional bonus of the universal power bill credit for all households.
If you have super salary sacrifice arrangements in place through your employment payroll, you will likely want to change the deduction amounts. This is due to changes in tax rates, thresholds and superannuation contribution caps commencing 1 July 2024.
Here are the changes you should be aware of.
Stage 3 tax cuts
We have been hearing about the Stage 3 tax cuts for a long time and they are already passed into law. There were no further changes announced in the Budget so these tax cuts will commence from 1 July 2024 as planned. These cuts provide most taxpayers with a reduction in tax of at least $804 per year, with some granted a reduction of up to $4,529. This presents an opportunity for many people to maximise tax deductions before 30 June 2024, including tax effective super contributions made before 30 June 2024. We have more information about that here. But what about the new tax rates?
Current 2023-24 rates |
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Taxable Income ($) |
Tax Payable ($) |
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| 0 – 18,200 | Nil | ||||
| 18,201 – 45,000 | Nil + 19% of excess over 18,200 | ||||
| 45,001 – 120,000 | 5,092 + 32.5% of excess over 45,000 | ||||
| 120,001 – 180,000 | 29,467 + 37% of excess over 120,000 | ||||
| 180,000+ | 51,592 + 45% of excess over 180,000 | ||||
New 2024-25 rates |
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Taxable Income ($) |
Tax Payable ($) |
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| 0 – 18,200 | Nil | ||||
| 18,201 – 45,000 | Nil + 16% of excess over 18,200 | ||||
| 45,001 – 135,000 | 4,288 + 30% of excess over 45,000 | ||||
| 135,001 – 190,000 | 31,288 + 37% of excess over 135,000 | ||||
| 190,001+ | 51,638 + 45% of excess over 190,000 | ||||
- The ATO will now be given statutory discretion to choose not to use a taxpayer’s refund to offset old tax debts on hold.
- Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023, resulting in many students receiving a write down in their debt to reduce the indexation applied in FY2024.
- The ATO Personal Income Tax Compliance Program is extended for one additional year from 1 July 2027. The ATO has been tasked to use the extension to continue delivering a combination of proactive, preventative and corrective activities in key areas of non-compliance. This measure is estimated to increase receipts by $180.3m and increase the payments by $44.3m over the 5 years from 2023–24.
- The threshold for singles is now $26,000
- The threshold for families is now $43,846
- The threshold for family income has been increased by $4,027 for each dependent child
- The threshold for single seniors and pensioners is now $41,089
- The threshold for family pensioners is now $57,198
- These increases range between $2,000 and $4,000, depending on personal circumstances.
- Social security deeming rates will be frozen at their current levels for another 12 months. This will enable more people to qualify for the age pension.
- Super on Paid Parental Leave – Superannuation Guarantee contributions will now be paid to all recipients of Paid Parental Leave, for parents of babies born or adopted on or after 1 July 2025.
- Superannuation Guarantee is increasing to 11.5% from 1 July 2024 – a 0.5% increase from the current 11.00%.
- The concessional contributions cap is increasing to $30,000 – a $2,500 increase from the existing $27,500 cap. The after-tax (non-concessional) contributions cap will also be lifted from $110,000 to $120,000. Both increases will commence from 1 July 2024.
- Energy Bill relief. Every household will receive a rebate of $300.
- PBS Medicines cost freeze for 5 years. The maximum Pharmaceutical Benefits Scheme (PBS) co-payment of $7.70 will be frozen for pensioners and Commonwealth concession card holders until 31 December 2029. For the rest of the Medicare card holders, the copayment is the amount that must be contributed towards the cost of PBS-subsidised medicines.
