2024 Tax Tables
The income tax rates for the 2023-2024 financial year (which runs from 1 July 2023 to 30 June 2024) are as follows:
- Taxable income up to $18,200: 0% tax
- Taxable income between $18,201 and $45,000: 19% tax on the amount over $18,200
- Taxable income between $45,001 and $120,000: $5,092 plus 32.5% tax on the amount over $45,000
- Taxable income between $120,001 and $180,000: $29,467 plus 37% tax on the amount over $120,000
- Taxable income over $180,000: $51,667 plus 45% tax on the amount over $180,000
Note that these rates do not include the Medicare Levy, which is an additional 2% tax on most taxpayers’ income that helps fund Australia’s public health system. There is also a Medicare Levy Surcharge for those who do not have private hospital insurance.
If I jump into the next bracket, do I pay that rate from dollar 1?
No, if you move into a higher tax bracket, you will only pay the higher tax rate on the income that falls within that bracket. The portion of your income that falls into the lower tax bracket(s) will still be taxed at the lower rate(s).
For example, let’s say you earn $50,000 per year. Under the 2023-2024 income tax rates in Australia, you would pay 19% tax on the portion of your income between $18,201 and $45,000, and 32.5% tax on the portion of your income between $45,001 and $50,000. So your total tax liability would be:
- 0% on the first $18,200 of income
- 19% on the next $26,799 of income ($45,000 minus $18,201)
- 32.5% on the remaining $4,999 of income ($50,000 minus $45,001)
Therefore, you would pay a total of $8,547.95 in tax for the year.
If your income increased to $60,000 per year, you would still pay 0% on the first $18,200 of income, 19% on the next $26,799 of income, and 32.5% on the portion of your income between $45,001 and $60,000. So your total tax liability would be:
- 0% on the first $18,200 of income
- 19% on the next $26,799 of income ($45,000 minus $18,201)
- 32.5% on the next $14,999 of income ($60,000 minus $45,001)
Therefore, you would pay a total of $11,547.95 in tax for the year.
Is it better to earn more and pay extra tax?
Whether earning more and paying extra tax is better depends on your financial goals, expenses, marginal tax rate, and other financial obligations. If your goal is to maximize income and accumulate wealth, earning more and paying more tax may be better. However, if you value work-life balance or other non-financial goals, a lower income and lower tax liability may be preferable.
Earning more can increase your standard of living and allow you to cover expenses more comfortably, but it can also mean a higher marginal tax rate on additional income, reducing its overall value. Other financial obligations, such as debt repayment or saving for retirement, should also be considered.
Ultimately, the decision to earn more and pay extra tax depends on your individual circumstances, priorities, and financial goals. It’s important to weigh the pros and cons and seek professional advice before making any significant financial decisions.