The Australian financial year (FY) 2024-25 brings several important updates to income tax, levies, deductions, and other key thresholds. Understanding these changes is crucial for both individuals and businesses to effectively manage their financial affairs. This guide provides a clear comparison between FY 2023-24 and FY 2024-25.
Contents
Income Tax BracketsMedicare Levy Low-Income ThresholdsD1 – Work Related Motor Vehicle Expenses (Fixed Rate Method)D5 – Other Work-Related Expenses (Work From Home)Business UpdatesD -12 Personal Super ContributionHECS-HELP Loan Repayment Thresholds and RatesOther Key RatesFringe Benefits Tax (FBT) on VehiclesMedicare Levy Surcharge (MLS) Thresholds and RatesCost Limit & Depreciation Limit Changes for FY 2024-25ATO Small Business Boosts & Offsets: FY 2024 vs. FY 2025 vs. FY 2026
Income Tax Brackets
For Australian Residents
The 2024-25 financial year sees significant adjustments to income tax rates for residents, primarily benefiting lower and middle-income earners through a reduction in the 19% and 32.5% tax rates.
| Taxable Income (FY 2023-24) | Old Tax Rate (FY 2023-24) | Taxable Income (FY 2024-25) | New Tax Rate (FY 2024-25) | Tax Payable (FY 2024-25) |
| $0 – $18,200 | 0% | $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 19% | $18,201 – $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 – $120,000 | 32.5% | $45,001 – $135,000 | 30% | $4,288 + 30c for each $1 over $45,000 |
| $120,001 – $180,000 | 37% | $135,001 – $190,000 | 37% | $31,288 + 37c for each $1 over $135,000 |
| $180,001 and above | 45% | $190,001 and above | 45% | $51,638 + 45c for each $1 over $190,000 |
For Non-Residents
Non-resident tax rates have also been adjusted, primarily mirroring the changes in the 32.5% bracket for residents.
| Taxable Income (FY 2023-24) | Old Tax Rate (FY 2023-24) | Taxable Income (FY 2024-25) | New Tax Rate (FY 2024-25) | Tax Payable (FY 2024-25) |
| $0 – $120,000 | 32.5% | $0 – $135,000 | 30% | 30c for each $1 |
| $120,001 – $180,000 | 37% | $135,001 – $190,000 | 37% | $40,500 + 37c for each $1 over $135,000 |
| $180,001 and above | 45% | $190,001 and above | 45% | $60,850 + 45c for each $1 over $190,000 |
Note: Medicare levy does not apply to non-residents.
Medicare Levy Low-Income Thresholds
To provide support for low-income earners, the Medicare Levy Low-Income Thresholds have been increased for FY 2024-25.
| Category | 2023–24 Threshold | 2024–25 Threshold | Notes |
| Singles (Lower Threshold) (Below this Full Exemption) | $26,000 | $27,222 | Net Taxable Income below $27,222 then Medicare Levy 0% |
| Singles (Upper Threshold) (Partial Levy) | $32,500 | $34,027 | If Net Taxable Income is between $27,222 to $34,027, the Medicare Levy will be calculated as (($Net Taxable Income – $27,222) * 2%). If Net Taxable Income is greater than $34,027, the Medicare Levy will be (Net Taxable Income * 2%). |
| Families | $43,000 | $45,000 (approx.) | Threshold increases by $1,500 for each dependent child after the first. |
| Seniors/Pensioners | $41,000 | $42,920 | (Lower threshold) |
| Seniors/Pensioners | N/A | $53,775 | (Upper threshold) |
D1 – Work Related Motor Vehicle Expenses (Fixed Rate Method)
The fixed rate for claiming motor vehicle expenses has been adjusted.
| Method | 2023–24 Rate | 2024–25 Rate | Notes |
| Petrol & Diesel Car | $0.85 Per Km | $0.88 Per Km | Cents Per Kilometre Method (5000km) Requires a reasonable estimate or logbook to justify the distance. |
| Fully Electric (EV Cars) | N/A | $0.042 Per Km | Calculating electricity costs when charging EVs at home (5000km) |
| Plug-in Hybrid Electric Vehicles (PHEVs) You cannot use the $0.85/km rate for using Petrol & Diesel. You cannot use the $0.042/km rate for home charging of PHEVs | N/A | N/A | You must use actual cost methods, which require: Petrol or diesel Actual Cost * Business Use. Electricity used for charging Actual Cost * Business Use. Other running costs (e.g., servicing, insurance, registration) Actual Cost * Business Use. |
Records to Keep for (PHEVs) to use Actual Cost Method:
- Use the logbook method.
- Keep Receipts and Records for All Expenses.
- For electricity: Use charging logs or smart charger data, multiply kilowatt-hours used by your electricity rate.
Example for PHEVs (Actual Cost Method):
- Question: If you drove 5,000 km for business and your logbook shows 60% business use, and:
- You spent $800 on petrol.
- You used 400 kWh of electricity at $0.30/kWh = $120.
- Answer:
- Claimable petrol = $800 × 60% = $480
- Claimable electricity = $120 × 60% = $72
- Total deduction = $552
D5 – Other Work-Related Expenses (Work From Home)
The fixed rate method for claiming work-from-home expenses has increased.
| Method | 2023–24 Rate | 2024–25 Rate | Notes |
| Fixed Rate Method (Rate Covers Electricity and gas, Internet and phone usage, Stationery and computer consumables) | $0.67 Per Hour | $0.70 Per Hour | You must keep accurate records of hours worked from home (e.g., timesheets or diary entries). |
Business Updates
Small Business Entity (SBE) Instant Asset Write-Off
The instant asset write-off threshold for small businesses has been extended.
| Category | 2023–24 Threshold | 2024–25 Threshold | Notes |
| SBE Instant Asset Write-Off | $1,000 to $20,000 | $1,000 to $20,000 | More Than $20,000 For First Year 15% and Consequent Year 30%. |
Small Business Income Tax Offset
The Small Business Income Tax Offset remains unchanged.
| Category | 2023–24 Offset | 2024–25 Offset | Notes |
| Small Business Income Tax Offset | Up to $1,000 | Up to $1,000 | Small Business Income Tax Offset Upto $1,000 Upto $1,000 “Not Changed (ATO or XPM will calculate Automatically) |
Example:
- Question: Total taxable income: $60,000, Net small business income: $10,000, Non-business income: $50,000.
- Answer: Your total income ($60,000) places you in the 30% marginal tax bracket (FY 2024–25).
- Tax on $10,000 business income = $3,000
- Offset = 16% × $3,000 = $480
- So, you would receive a $480 tax offset, not the full $1,000, because the offset is based on the tax payable on the business portion, not the full business income.
D -12 Personal Super Contribution
The concessional (pre-tax) contribution cap has increased.
| Category | 2023–24 Cap | 2024–25 Cap |
| Concessional (pre-tax) contribution cap | $27,500 | $30,000 |
HECS-HELP Loan Repayment Thresholds and Rates
The HECS-HELP repayment thresholds have increased for FY 2024-25.
| Repayment Income (RI) (FY 2023–24) | Repayment Rate (FY 2023–24) | Repayment Income (RI) (FY 2024–25) | Repayment Rate (FY 2024–25) |
| Below $51,550 | Nil | Below $54,435 | Nil |
| $51,550 – $59,518 | 1.00% | $54,435 – $62,850 | 1.00% |
| $59,519 – $63,089 | 2.00% | $62,851 – $66,620 | 2.00% |
| $63,090 – $66,875 | 2.50% | $66,621 – $70,618 | 2.50% |
| $66,876 – $70,888 | 3.00% | $70,619 – $74,855 | 3.00% |
| $70,889 – $75,140 | 3.50% | $74,856 – $79,346 | 3.50% |
| $75,141 – $79,649 | 4.00% | $79,347 – $84,107 | 4.00% |
| $79,650 – $84,429 | 4.50% | $84,108 – $89,154 | 4.50% |
| $84,430 – $89,494 | 5.00% | $89,155 – $94,503 | 5.00% |
| $89,945 – $94,865 | 5.50% | $94,504 – $100,174 | 5.50% |
| $94,866 – $100,557 | 6.00% | $100,175 – $106,185 | 6.00% |
| $100,558 – $106,590 | 6.50% | $106,186 – $112,556 | 6.50% |
| $106,591 – $112,985 | 7.00% | $112,557 – $119,309 | 7.00% |
| $112,986 – $119,764 | 7.50% | $119,310 – $126,467 | 7.50% |
| $119,765 – $126,950 | 8.00% | $126,468 – $134,056 | 8.00% |
| $126,951 – $134,568 | 8.50% | $134,057 – $142,100 | 8.50% |
| $134,569 – $142,642 | 9.00% | $142,101 – $150,626 | 9.00% |
| $142,643 – $151,200 | 9.50% | $150,627 – $159,663 | 9.50% |
| $151,201 and above | 10.00% | $159,664 and above | 10.00% |
Other Key Rates
Important interest rates and superannuation guarantee rates for the upcoming financial year.
| Category | 2023–24 Rate | 2024–25 Rate | 2025–26 Rate |
| Division 7A Deemed Interest Rate | 8.27% | 8.77% | |
| Superannuation Guarantee (SG) Rate | 11.00% | 11.50% | 12.00% |
Fringe Benefits Tax (FBT) on Vehicles
Significant changes are coming to FBT exemption for Plug-in Hybrid Electric Vehicles (PHEVs).
| Vehicle Type | FBT Year 2024 | FBT Year 2025 & 2026 | Explanation Notes |
| Battery EV | Value of EV below $89,332, Eligible for FBT Exemption. | Value of EV up to $91,387, Eligible for FBT Exemption. | LCT thresholds Increase. |
| Hydrogen Fuel Cell | Value of HFCV below $89,332, Eligible for FBT Exemption. | Value of HFCV below $91,387, Eligible for FBT Exemption. | LCT thresholds Increase. |
| Plug-in Hybrid (PHEV) | Value of PHEV below $89,332, Eligible for FBT Exemption. | Not eligible for FBT Exemption Unless under binding agreement | From 1 April 2025, plug-in hybrid electric vehicles (PHEVs) will no longer qualify as zero or low-emission vehicles under FBT law. This means employers cannot claim FBT exemption for PHEVs provided to employees after 1 April 2025. However, if a PHEV was used or available for use before 1 April 2025, and provided under a financially binding commitment (e.g., lease or salary packaging agreement) that commenced before 1 April 2025, then the exemption can continue for the life of that specific agreement. Any changes to the binding agreement, such as refinancing, extending the lease term, pausing due to unpaid leave, or changing employers, after 1 April 2025, will cause the PHEV to no longer qualify for the FBT exemption. The ATO has no discretion to extend this date, including where delivery delays occur due to unforeseen circumstances. |
Medicare Levy Surcharge (MLS) Thresholds and Rates
The MLS income thresholds have increased for FY 2024-25.
| Threshold | MLS Income Thresholds (FY 2023–24) | MLS Income Thresholds (FY 2024–25) | Medicare Levy Surcharge Rate (all tiers) |
| Single | |||
| Base Tier | $93,000 or less | $97,000 or less | 0% |
| Tier 1 | $93,001 – $108,000 | $97,001 – $113,000 | 1.00% |
| Tier 2 | $108,001 – $144,000 | $113,001 – $151,000 | 1.25% |
| Tier 3 | $144,001 or more | $151,001 or more | 1.50% |
| Family | |||
| Base Tier | $186,000 or less | $194,000 or less | 0% |
| Tier 1 | $186,001 – $216,000 | $194,001 – $226,000 | 1.00% |
| Tier 2 | $216,001 – $288,000 | $226,001 – $302,000 | 1.25% |
| Tier 3 | $288,001 or more | $302,001 or more | 1.50% |
Note: The family income threshold is increased by $1,500 for each MLS dependent child after the first child. You may have to pay MLS if you, your spouse, and your dependent children do not have an appropriate level of private patient hospital cover, and your income for MLS purposes is above the relevant threshold.
Cost Limit & Depreciation Limit Changes for FY 2024-25
- Car Depreciation Limit: This is the maximum value you can use to calculate depreciation on a car for income tax purposes if it’s first used or leased in the 2024-25 income year. If your car costs more than this limit, you can only depreciate up to this capped amount.
- GST Impact: If you buy a car that exceeds the car depreciation limit, the maximum GST credit you can claim is also limited to one-eleventh of the car limit, regardless of the actual purchase price. You generally cannot claim a GST credit for any LCT paid.
| Category / Financial Year | FY 2023-24 | FY 2024-25 & FY 2025-26 | Notes |
| Car Depreciation Limit | $68,108 (Gross Including GST) | $69,674 (Gross Including GST) Breakdown Net: $63,340 GST: $6,334 Gross: $69,674 | Maximum value on which you can claim depreciation for income tax purposes for cars first used or leased in the respective financial year. |
ATO Small Business Boosts & Offsets: FY 2024 vs. FY 2025 vs. FY 2026
| Feature / Incentive | FY 2024 (Ended 30 Jun 2024) | FY 2025 (Starts 1 Jul 2024) | FY 2026 (Starts 1 Jul 2025) | Extension / Notes |
|---|---|---|---|---|
| Instant Asset Write-Off | Up to $20,000 | Up to $20,000 | Up to $20,000 | Extended to 30 Jun 2025 & beyond (tools/equipment uncapped) |
| Technology Investment Boost | Ended 30 Jun 2023 | Not Applicable | Not Applicable | Not Extended |
| Skills and Training Boost | Ended 30 Jun 2024 | Not Applicable | Not Applicable | Not Extended |
| Energy Incentive | Ended 30 Jun 2024 | Not Applicable | Not Applicable | Not Extended |
| Energy Bill Relief (Rebate) | Up to $325 | Up to $300 (households) / Up to $325 (small businesses) | Up to $150 (from 1 Jul 2025) | Rebates applied via electricity bills |
| Deductibility of ATO Interest | Generally deductible | Generally deductible | Not deductible | Change applies from 1 July 2025 |
| National Minimum Wage | $23.23/hr (from 1 Jul 2023) | $24.10/hr (from 1 Jul 2024) | $24.94/hr (from 1 Jul 2025) | Based on Fair Work Commission decisions |
| Superannuation Guarantee (SG) Rate | 11.00% | 11.50% | 12.00% | Final increase from 1 July 2025 |
| Paid Parental Leave Superannuation | No | No | Yes | New ATO-funded super from 1 July 2025 |
