As part of the Budget, the Government has introduced only minimal changes to personal taxation. The key changes are to increase the 32.5% personal income tax threshold and the Medicare levy low-income threshold.
Personal income tax threshold
From 1 July 2016, the 32.5% personal income tax threshold will increase from $80,000 to $87,000. This will address bracket creep by reducing the marginal rate of tax on incomes between $80,000 and $87,000 from 37% to 32.5%.
As foreshadowed by the Treasurer prior to the Budget, the 2% budget deficit levy on incomes over $180,000 will not be extended beyond the end of the 2016-17 financial year.
Medicare levy low-income thresholds
The Government will increase the Medicare levy low-income threshold for singles, families, seniors and pensioners from the 2015-2016 income year. This seeks to take account of movements in the CPI. The Government has also announced that it will suspend indexation of the income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate for a further three years.