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How will I benefit from Stage 3 tax cuts

Estimated reading time: 4 minutes

Part of effective financial planning is the ongoing review of your situation due to changes in economic, legislative and your personal circumstances. With the Albanese government confirming that they will be modifying the Stage 3 tax cuts, we want to explore how this legislation change can impact a financial plan and modelling different scenarios to further benefit.

Please remember that this information is general in nature and does not consider your personal circumstances. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs. In addition, you should consider the Product Disclosure Statement (PDS) of any financial product you may be considering to use.

What tax changes will be made?

From 1st July 2024 the new tax cuts are summarised by the below table:

ThresholdTax rate (%)ThresholdTax rate (%)
$0 – $18,200Tax free$0 – $18,200Tax free
$18,201 – $45,00019%$18,201 – $45,00016%
$45,001 – $120,00032.5%$45,001 – $135,00030%
$120,001 – $180,00037%$135,001 – $190,00037%
Over $180,00045%Over $190,00045%
Proposed stage 3 tax cuts

A calculator from the Treasury website can be accessed to estimate your personal tax rate.

We have calculated based on a few scenarios how much will be saved in tax compared to the current financial year:

IncomeApproximate future tax savings per annum

Strategic use of tax savings:

Any tax saving is a welcome surprise and at MLS Financial we are always looking for further opportunities to optimise your finances. We have modelled two strategies using this new surplus income to build wealth and paying down debt.

Our first scenario is to use the tax savings to pay down a mortgage. The second is to concessionally contribute these savings to a superannuation fund.

Paying down a mortgage:

We have considered a 30 year, $700,000 mortgage with the interest rate of 6.18% p.a. which is the current average interest rate for an Owner-Occupier paying principal and interest from the RBA in December 2023.

The strategy models using each scenario’s tax saving to pay a lump sum off the mortgage each year for the first 5 years.

Income levelExtra annual payment
(first 5 years)
Interest savedLength of mortgage reduction
$60,000$1,179$25,2797 months
$100,000$2,179$45,8351 year and 1 month
$150,000$3,729$76,2031 year and 10 months
$200,000$4,529$91,2102 years and 2 months

Extra concessional contribution to super:

Our second scenario is using the tax savings to contribute to superannuation as a further concessional contribution. Similar to the previous scenario, we are modelling an annual payment of the tax savings for the first 5 years.

We have modelled the projected balance after 30 years earning at an annualised rate of 6.18% to normalise the results against the mortgage scenario. Please remember that investment earnings are not guaranteed.

This scenario does not model the 15% tax on earnings in a superannuation fund.  

Income levelAnnual contribution
(first 5 years)
Benefit of tax deductionExtra balance after 30 years

This scenario is reliant on having extra concessional contributions caps in the financial year of each contribution.


The stage 3 tax cuts will present an opportunity for the majority of Australians to increase their take home pay. Reviewing your current financial plan to include your new surplus income can help you to be one step closer to financial freedom. You should consider your own circumstances, goals and objectives including the benefits and disadvantages of any strategy you are considering.

If you want to discuss either of these strategies and whether they are appropriate for you, contact MLS Financial today through our online contact form.


  • This information has been compiled from sources considered to be reliable, but is not guaranteed.
  • Past performance is not a reliable indicator of future performance.