Easing The Cost of Living Pressures: How Does The 2024 Budget Impact Me?

Introduction

The start of the end of this financial year has marked the beginning of a wide range of benefits for individuals across Australia. The Australian government has framed these benefits around alleviating the stress of cost of living expenses alongside assisting Australians keep more of what they actually earn. Australians are facing immense financial pressures and these tax cuts are mechanisms that are being implemented to deliver meaningful cost of living relief to the middle class without inflationary pressures.

This article outlines some of the key changes this financial year.

What Taxes Are Changing?

From July 1 this year, the changes will:

  • reduce the 19 per cent tax rate to 16 per cent
  • reduce the 32.5 per cent tax rate to 30 per cent
  • increase the income threshold above which the 37 per cent tax rate applies from $120,000 to $135,000
  • increase the income threshold above which the 45 per cent tax rate applies from $180,000 to $190,000.

The changes provide taxpayers with greater protection against bracket creep, particularly low‑ to middle‑income taxpayers, and support the progressivity of the tax system.

A Women Driven Initiative

The proposed tax cuts are aimed at bolstering Australians’ ability to retain a greater portion of their earnings. By enhancing take-home pay, these reductions seek to alleviate disincentives hindering Australians from increasing their work hours. Projections indicate that these tax cuts could potentially boost weekly labor supply by 930,000 hours, akin to approximately 25,000 full-time positions. This surge is anticipated to be primarily driven by women and individuals within the low-to-middle-income brackets, particularly those earning between $25,000 and $75,000. Furthermore, in the fiscal year 2024-25, all 6.5 million women taxpayers are slated to benefit from these tax reductions, with an average monetary gain of roughly $1,650 each. This initiative is designed not only to amplify the financial rewards of employment but also to fortify overall workforce participation rates.

Energy Rebates

Starting this financial year, the Australian Government is providing $3.5 billion into energy relief for all Australian households alongside around one million small businesses. From July 1 2024, over 10 million households will receive a $300 rebate and small businesses will receive a $325 rebate on their electricity bills.

Wiping Away of Student Debts

This financial year, the Government will cut $3 billion in student debt for over 3 million Australians. The wiping away of this sum will provide everyone who has a Higher Education Loan Program (HELP) with financial relief, alongside all vocational education and training (VET) loans, Australian Apprenticeship Support Loans and various other supported loans.

Wage Increases

The Government has pledged financial support for the Fair Work Commission’s decision to boost award wages for aged care workers, in addition to the $11.3 billion already earmarked for a temporary 15% raise. Furthermore, the Government has committed to allocating funds for a wage hike for the early childhood education and care sector. Specifics will be determined once the ongoing Fair Work Commission procedures conclude.

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These initiatives underscore the Government’s dedication to addressing wage disparities and improving remuneration across critical sectors of the workforce, ensuring fair compensation that reflects the invaluable contributions of these essential workers to the community and economy.

The beginning of this financial year heralds significant changes aimed at bolstering financial well-being and relieving economic pressures for Australians. The tax reforms, including reductions in various tax brackets and adjustments to income thresholds, are pivotal in protecting against bracket creep and supporting a fairer tax system. These measures particularly benefit low- to middle-income earners, enhancing take-home pay and incentivizing greater workforce participation, notably among women. Additionally, substantial energy rebates and the elimination of student debt alleviate financial burdens across households and individuals. Moreover, increased support for aged care and early childhood education workers demonstrates the government’s commitment to fair wages and workforce development. These initiatives collectively reflect a proactive approach to fostering economic resilience and ensuring equitable opportunities for all Australians in the coming fiscal year and beyond.

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