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2023 Federal Budget: Stage 3 Tax Cut Calculator


It’s the dirty little secret buried in Prime Minister Anthony Albanese’s media blitz over the cost of living in the budget.

While the budget plans to dole out $14 billion in living expenses for families, the wealthy will still get many more tax cuts.

Here’s how. The centerpiece of the Albanian government’s second budget will be $14.6 billion over four years for cost-of-living relief that will ease pressure on Australians.

That includes a reduction in utility bills to $500 for retirees and low-income families and many other measures aimed at underprivileged and elderly retirees.

But how does that compare to the Phase 3 tax cuts that take effect in 2024-2025?

The Grattan report noted that the Phase 3 income tax cuts will cost the budget about $20 billion a year from mid-2024. That is every year, no more than four years.

In other words, the wealthy will secure more living expenses through tax cuts next year alone than all living expenses in this budget that rolls out over four years.

But wait, there’s more.

Those Stage 3 tax cuts are estimated to cost $31 billion by 2030. That means the wealthy will secure twice the value of the budget cost of living in one year.

RELATED: 10 million Aussies face ‘substantial’ tax increase

Asked about’s report this morning, Dr Chalmers said the vulnerable got help first.

“You talk about helping the vulnerable, your cost of living package will cost $14 billion over four years. Phase 3 tax cuts coming next year will cost more than $20 billion a year. How do you reconcile that?” he was asked.

“We will help the vulnerable this year, within this budget,” said Dr Chalmers.

“The tax cuts you pick up, they haven’t come in for over a year now. They have not been the subject of our discussions for this budget. But we can help the most vulnerable people in our community and in our country this year.”

What are the phase 3 tax cuts?

The Stage 3 tax cuts completely abolish the 37 percent marginal tax bracket and lower the marginal tax rate from 32.5 percent to 30 percent.

The changes also raise the 45% marginal tax rate threshold, meaning anyone earning between $45,000 and $200,000 will pay the same 30% marginal tax rate.

What happens if I am a single mother on social assistance benefits?

Single parents on welfare are billed as some of the biggest winners in Tuesday’s budget, one that will confirm that single parents can receive the single parent benefit until their youngest child turns 14 — from the current age of eight.

That provides a windfall of $4,576 per year for eligible families.

The decision ends one of Julia Gillard’s most controversial policies by allowing single parents to stay at home for another four years without being transferred to JobSeeker.

Eligible single parents currently working on JobSeeker as a result of the changes are also winners under the changes and will secure an increase in payments of $176.90 every two weeks.

These parents will receive a current base rate of $922.10 every two weeks (95 percent of the retirement pension), until their youngest child turns 14.

That works out to about $23,972 a year or $461 a week.

Sound like a winner? Maybe, until you meet the employee who makes $200,000.

What happens if an employee earns $200,000?

Compare the scenario of a single mother with an employee who earns $200,000 a year.

Under the Stage 3 tax cuts, they will receive a whopping $9,075 tax cut from 2024-25.

That means they will get a tax cut worth as much as $175 per week.

That is the same support that a single parent on welfare receives for two weeks if he has teenage children.

The difference is that the $200,000 worker has an income about ten times that of a single mother.

What happens if I have an income of $120,000? or $80,000?

A single taxpayer earning $120,000 pays about $24,375 per year in taxes.

Under the Stage 3 tax cuts, this employee gets a tax cut worth only $1,875.

But it could be worse. If you make $80,000 a year, your tax cut is only worth $875.

If you earn $50,000, your tax cut is only worth $125. That is for the whole year.

Treasurer sticks to phase 3

Despite widespread speculation that the Albanian government might reconsider the tax cuts, the treasurer is firm.

“Our stance on Phase 3 tax cuts has not changed and it is important to remember that they have not come in for over a year now,” the treasurer said this month.

“And so making those kinds of decisions about those Stage 3 tax cuts wouldn’t have any impact on the inflationary environment that we’re facing right now. Our focus in this budget is to weather all the pressures in our economy in a methodical and responsible manner. That means a decent cost-of-living package targeted at the most vulnerable, delivered in the most responsible way.”

Anthony Albanian

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.