Question 1

Why should I compare my income tax across financial years?

Accepted Answer

Comparing income tax across financial years helps you understand how changes to tax brackets, the Low Income Tax Offset (LITO), and other tax policies affect your take-home pay. This is particularly relevant with the Stage 3 tax cuts that took effect from 1 July 2024, which significantly changed the tax brackets for most Australian taxpayers.

Question 2

What changed with the Stage 3 tax cuts from 2024-25?

Accepted Answer

The revised Stage 3 tax cuts reduced the 19% tax rate to 16%, lowered the 32.5% rate to 30%, and raised the threshold for the 37% rate from $120,000 to $135,000. The 45% rate threshold was also raised from $180,000 to $190,000. These changes benefit low and middle-income earners more than the original Stage 3 plan.

Question 3

Are the tax brackets different for 2025-26?

Accepted Answer

The 2025-26 tax brackets remain the same as 2024-25 unless the government announces further changes. The comparison calculator uses the latest published ATO tax rates for each financial year so you can see exactly how your tax liability changes year over year.

Question 4

Does this calculator include the Medicare Levy?

Accepted Answer

Yes, the comparison includes the 2% Medicare Levy for each financial year. The Medicare Levy is calculated on your taxable income and is included in the total tax figure. The calculator also accounts for the Medicare Levy low-income threshold, which may exempt or reduce the levy for lower-income earners.

Question 5

How is the effective tax rate calculated?

Accepted Answer

The effective tax rate is your total tax (including income tax, minus offsets like LITO, plus Medicare Levy) divided by your gross income, expressed as a percentage. It represents the average rate of tax you pay on every dollar earned, which is typically much lower than your marginal tax rate.

Item	FY 2023-24	FY 2024-25Best	FY 2025-26
Gross Income	$100,000	$100,000	$100,000
Income Tax	$22,967	$20,788	$20,788
LITO	-$0	-$0	-$0
Medicare Levy	$2,000	$2,000	$2,000
Total Tax	$24,967	$22,788	$22,788
Take-Home Pay	$75,033	$77,212	$77,212
Effective Rate	24.97%	22.79%	22.79%
Marginal Rate	32.5%	30.0%	30.0%

Income Tax Comparison Calculator

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FY 2023-24

FY 2024-25

FY 2025-26

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