Tax Changes for 2023/24

Home Tax Guides Tax Changes for 2023-24

Every year around tax time, things can change, the government may choose to implement new schemes, cuts or hikes in your tax, and it can be difficult to keep track of what will happen.

At, we want to help you understand exactly what has changed for the 2023/24 tax year and have put together this handy guide to tell you the key things you need to know when it comes to tax.

The Simple Tax Changes for 2023/24 in Australia

The 2023/24 tax year in Australia brings several important changes that impact both individuals and businesses. These updates aim to support economic growth, enhance tax compliance, and adjust for inflation. Understanding these changes is crucial for effective financial planning and compliance with tax obligations.

tax changes guide

Summary of Tax Changes for 2023-24

  • No LMITO Extension: Low and Middle Income Tax Offset (LMITO) not extended.
  • Superannuation Guarantee: Increased to 11%.
  • Electric Vehicles (EVs): Exemption from fringe benefits tax (FBT) and import tariffs for EVs below the luxury car tax threshold.
  • Home Office Expenses: Updated fixed-rate method.

Tax Brackets and Rate of Tax for 2023/24

Here are the tax rates for 2023/24. Note that the following rates do not include the 2% Medicare levy.

Tax Brackets Tax Rates
$18,000 or below No taxes
$18,201 to $45,000 19c for every $1 over $18,200
$45,001 to $120,000 $5,5092 + 32.5% for every $1 over $45,000
$120,001 to $180,000 $29,467 + 37% for every $1 over $120,000
$180,001 or more $51,667 + 45% for every $1 over $180,000

If you have been paying attention, the 2023/24 tax rates are the same as the previous 2022/23 fiscal year.

What Are the Main Tax Changes for 2023/24?

The March 2022/23 Budget previously extended and raised the Low and Middle Income Tax Offset (LMITO) from $1,080 to $1,500 for the fiscal year 2021/22. However, the LMITO will no longer be in effect soon.

On the other hand, the Low-Income Tax Offset (LITO) receive is based on your taxable income:

  • $37,500 or less: You will receive the maximum offset of $700.
  • Between $37,501 and $45,000: You will receive $700, reduced by 5 cents for every dollar over $37,500.
  • Between $45,001 and $66,667: You will receive $325, reduced by 1.5 cents for every dollar over $45,000.

The ATO will calculate your offset and reduce your tax payable accordingly.

You can learn more here about how this will effect you.

It was announced that starting the 2018/2019 income year, singles, pensioners, families, and seniors in the low-income thresholds would stay exempted from paying Medicare. 

To know your Medicare levy, use this online calculator.

For 2022/23, low-income and other partial or full Medicare exemptions are available. It should be noted that a Medicare Levy Surcharge may also be applied on a progressive basis. That is if citizens do not maintain their private health insurance coverage. 

But what is a Medicare Levy Surcharge (MLS)? It is a type of federal government tax collected to pay for public healthcare. Everyone benefits from Medicare, which allows even those who cannot afford to obtain services from hospitals and medical professionals. However, Medical Levy Surcharge only applies to Australians taking out private companies’ health insurance.

Almost all people with a full-time job are required to pay the Medicare Levy, which is at two per cent. As stated above, the exception is for those who do not meet the income threshold. People whose income is more than $90,000 and $180,000 for singles and couples, respectively, will have to pay the Medicare Levy Surcharge. However, they should not have any private health insurance.

For the 2023-24 income year, the rate for claiming work-related car expenses using the cents per kilometre method has increased to 85 cents per kilometre.

This rate is comprehensive and covers all eligible car expenses, including registration, insurance, repairs, maintenance, fuel, and depreciation. Consequently, you cannot claim deductions for these costs separately elsewhere in your tax return.

Increased Rate Per Hour: The rate per hour you can claim has increased from 52 cents to 67 cents for each hour you work from home. Additionally, you no longer need a designated working area or home office.

While this seems beneficial at first glance, there are some drawbacks to consider.

Absorbed Deductions: The new fixed rate of 67 cents per hour now includes several deductions that you previously claimed separately, potentially reducing your overall tax benefit.

Items You Can’t Claim Separately When Using the 67 Cents Per Hour Rate:

  • Internet expenses
  • Home and mobile phone expenses
  • Electricity and gas used for heating, cooling, and lighting
  • Stationery and computer consumables (e.g., printer ink, paper)

Additional Deductions Allowed Alongside the 67 Cents Per Hour: While many common deductions are now absorbed into the fixed rate, you can still claim:

  • Depreciation of assets costing more than $300, such as office furniture, computers, and mobile phones.
  • Expenses for work-related purchases up to $300, like desk chairs and monitors.
  • Costs for cleaning your home office and repairing office furniture.


The age at which an individual can make a downsizer contribution to their superannuation has been revised.

Eligible individuals who have reached the appropriate age can contribute up to $300,000 from the proceeds of selling their home into their superannuation fund. The eligible age requirements are as follows:

  • From 1 January 2023, 55 years or older
  • From 1 July 2022, 60 years or older
  • From 1 July 2018, 65 years or older

The fringe benefits tax (FBT) exemption introduced last year eliminates the tax for electric vehicles (EVs) under $89,332, the luxury car tax threshold for fuel-efficient vehicles. This policy makes EVs more affordable and attractive for fleets and eligible individuals by reducing the cost to be comparable with petrol or diesel cars, already driving significant demand for EVs.

This incentive lowers the cost of owning an eligible EV and covering running costs through a novated lease by thousands of dollars per year. EVs and plug-in hybrid electric vehicles (PHEVs) valued up to $89,332 in FY 2023/24 qualify for the FBT exemption. However, the exemption for PHEVs is set to expire on 1 April 2025.

Tax Brackets and Rate of Tax for 2024/25

Starting July 1, 2024, the 37% marginal tax rate for individuals earning more than $120,000 annually is set to be abolished. Additionally, the 32.5% tax rate will be reduced to 30% for those earning between $45,000 and $200,000. This change will create a single 30% tax bracket for income within this range, while the 45% tax rate for earnings above $200,000 will remain unchanged.

However, these tax cuts predominantly benefit higher-income earners. Individuals earning $45,000 will not see any change, those earning $80,000 will receive a modest benefit of $875, while individuals earning $200,000 will gain significantly more, with a reduction of $9,075.

Tax Brackets Tax Rates
$18,200 or below No taxes
$18,201 to $45,000 16c for every $1 over $18,200
$45,001 to $135,000 $4,288 + 30% of excess over $45,000
$135,001-$190,000 $31,288 + 37% of excess over $135,000
$190,001 or more $51,638 + 45% of excess over $190,000

As a taxpayer, many of these reforms may have changed how you should pay your taxes. Be sure to stay updated with any alterations that may impact your obligations. To make everything easier, have experts sort your tax return for you. Contact today.

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