2017 Income Tax Rates

The 2016 Federal Budget released in May tabled an increase in the tax threshold where the 37% tax rate starts. The previous threshold was $80,000 and the new threshold is now $87,000.

Tax Savings

So how much tax does this save you? If your income is less than $80,000 then, unfortunately, no savings will be made, but if your income is greater that $80,000 then you will save $4.50 for every $100 you have earned over $80,000. The maximum savings will be $315 or $6.05 per week.

The changes to the rates will occur on October 1st, 2016, so you should see an immediate adjustment to your take home pay of $6.05 per week if your income is above $87,000. If your income is between $80,000 – $87,000 then you will receive a proportional, or pro-rata amount.

Backdated

The new tax threshold will be backdated to the 1st July 2016, but you will not see any benefit for the 13 weeks leading up to the changes until your 2017 income tax return is lodged. At this point, you will then receive the $78.65, (13 x $6.05), as part of your refund or as a reduction in the amount of tax due for payment.

Higher Tax Bracket

Some mistakenly think that as you move into a higher tax bracket, all of your earnings are taxed at the higher tax rate. Thankfully this is not the case, only the income above the tax bracket is taxed at that rate.

Using the chart below if your income was $92,000, only $5,000 would be taxed at 37%, not the full $92,000.

 

New Tax Tables

Tax Rates for 2016-2017:
Taxable IncomeTax on this income
$0 – $18,200Nil
$18,201 – $37,00019c for each $1 over $18,200
$37,001 – $87,000$3,572 plus 32.5c for each $1 over $37,000
$87,001 – $180,000$19,822 plus 37c for each $1 over $87,000
Over $180,000$54,232 plus 45c for each $1 over $180,000

9 Comments

  1. how much comes if i earn $1035 every week. i think i am paying over tax’
    thanks
    ELius

  2. Hi
    I’m reaching 180k threshold. If I slow down (i.e. not exceeding 180k for this FY), am I better off?. Ta

    1. The tax rate for the amounts over 180k for the financial year ending 30th June 2011 is 45%.
      SO for every $1,000 earned over $180k, $450 will be tax and $550 will be yours.
      I can not answer whether you are better off or not, as work is only part of a persons life.

  3. Hi, I am on $48k gross and have an investment property for which i’ll pay over $11,000.00 in interest before EOFY- does this mean a better tax return for me? thankyou

    edit: i should include i’d have recieved $9704 in rental income by EOFY- thanks a lot, Dan

    1. For income greater than 37k and less than 80k the tax rate is 30% plus 1.5% Medicare levy. Based on 9.7k in rent less the 11k in interest and say 3k in expenses such as water and council rates, management fees.
      The property would have a loss of $4,300, at 31.5% it will save you $1,354.50 in tax. This is not to be confused with your tax refund/payable which would be a completely different calculation

  4. Hi, I work for an agency and have 5 separate tax statements. I have been paid $44,500 (gross) and my taxable income was $5058. I am also a part-time student. I think I haven’t paid enough tax, does this mean I now owe money this financial year?
    Kind Regards, Trish.

    1. Trish, Unfortunately your thoughts are correct, the tax is $6,900 and medicare levy is $667 on $44,500 totaling $7567.
      These amounts don’t include any tax deductions, but for every $100 spent on deductions the amount is reduced by $31.50.
      Also, if you have an amount to pay, the ATO will let you make arrangements over 24 months to pay off any debts.

  5. Hi, thanks for the info. The rate of tax for people earning over $180 seems to rise sharply. I am on a salary of $162000 but with some overtime will come close to $180k however I salary sacrifice my super. I gather I should avoid going over the $180k threshold

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