2025 Tax Table Australia: Rates, Changes, and What It Means for You

The Australian tax table isn’t just a set of numbers—it’s the backbone of how much you take home and how much you give to the ATO. With the 2025 financial year ushering in some of the most significant tax changes in over a decade, it’s crucial to know exactly where you stand. Whether you’re a wage earner, a freelancer, or managing payroll for a business, understanding the new tax rates and thresholds could be the difference between a surprise bill and a welcome refund.

What’s New in the 2025 Tax Table?

This year’s tax table is anything but routine. Following the Stage 3 tax cuts, which kicked in from 1 July 2024, the structure of Australian income tax has shifted. Here’s what you need to know:

• Fewer tax brackets: The middle-income bracket has been flattened, reducing the complexity for most Australians.
• Lower marginal rates: The 37% bracket has been removed entirely, and the 32.5% rate is now 30%.
• Threshold changes: The threshold for the top 45% tax rate now starts at $190,000.

Here’s a snapshot of the 2025 tax table for residents:

These changes mean more take-home pay for millions. For example, a full-time worker earning $80,000 will save around $1,700 a year compared to last year’s rates.

Who Benefits Most from the 2025 Tax Table?

The new tax table is designed to put more money back into the pockets of middle-income earners while also providing relief for higher-income Australians. Here’s how different groups are affected:

• Middle-income earners (in the $45,001–$135,000 range) see the biggest percentage cut.
• High-income earners benefit from the higher 45% threshold, but the removal of the 37% bracket means less of a jump in marginal rates.
• Low-income earners continue to pay no tax on the first $18,200, and may also benefit from the Low Income Tax Offset (LITO), which remains in place for 2025.

For businesses, the simplified tax structure makes payroll calculations more straightforward, reducing errors and compliance risks. Contractors and freelancers should review their withholding arrangements to ensure they’re not caught out by under- or overpayment.

How to Optimise Your Tax in 2025

With the new table in effect, now’s the time to review your tax planning. Here are practical steps to make the most of the changes:

• Check your PAYG withholding: Use the ATO’s updated calculators to make sure your employer is deducting the right amount from your pay.
• Salary sacrifice smarter: With lower marginal rates, re-calculate the benefits of salary packaging, especially for super contributions or novated leases.
• Review investment strategies: Lower tax on additional income could impact your strategy for dividends, rental properties, or side hustles.
• Claim deductions early: If you’re entitled to work-related deductions, lodging your return sooner could mean a faster refund.

Keep in mind that the Medicare levy (2%) and other offsets may also apply, but the core tax table remains the foundation of your annual tax calculation.

Looking Ahead: Future Tax Table Changes?

While the 2025 tax table is set, there’s ongoing debate about further reforms. The government is keeping an eye on inflation, bracket creep, and cost-of-living pressures. Any further adjustments will likely be announced in the 2025–26 Federal Budget, so it pays to stay informed.