Stage 3 Tax Cuts: How Much You've Actually Saved Since 2024

On 1 July 2024, every Australian taxpayer earning over $18,200 received a tax cut. You have now received it for nearly two full financial years — close to $2,500-$5,000 in extra take-home pay depending on your income.

Most people don't know the exact number. The increase came through reduced PAYG withholding each fortnight — a quiet $30-$80 per week that the typical household absorbed into rent, groceries, and rates without flagging it as a windfall. As of 25 May 2026, here is exactly how much you have saved, why the savings vary so sharply by income, and what to do with the difference before EOFY 2026.

Sarah's saving: $2,554 a year, every year, automatic

Sarah is 36, a marketing manager in Brisbane earning $115,000. Her FY2023-24 tax bill (the last year before Stage 3) was $27,842. Under Stage 3 her FY2024-25 bill dropped to $25,288 — a saving of $2,554, or about $49 a week.

By 30 June 2026 — five weeks from now — Sarah will have received the $2,554 twice: once across FY2024-25 and again across FY2025-26. Total cumulative saving: $5,108. None of it required an application, a form, or a tax-agent visit. The ATO simply lowered the withholding rate her payroll software applies.

Stage 3 vs pre-Stage 3 brackets, side by side

The pre-Stage 3 brackets (which applied to FY2023-24 and every prior year back to 2020-21) used four marginal rates: 19%, 32.5%, 37%, 45%. Stage 3 cut the bottom rate to 16%, removed the 32.5% bracket entirely, and pushed the 37% threshold from $120,000 to $135,000.

Verified against the ATO "Tax rates – Australian resident" page on 2026-05-25. Stage 3 brackets apply to FY2024-25 and FY2025-26 and continue indefinitely. The 16% bracket drops to 15% from 1 July 2026 under separate legislation.

Your exact saving by income (annual + cumulative)

The dollar saving plateaus at $4,529 per year for incomes above $190,000. Below $135,000 the saving scales steeply with income because each extra dollar through the old 32.5% bracket now flows through the new 30% bracket — a 2.5-percentage-point cut on a much bigger slice of income.

Income tax only — excludes Medicare Levy (2%), LITO offsets at lower incomes, and the Medicare Levy Surcharge at $101k+ without hospital cover. The Stage 3 cut saving is identical in dollar terms regardless of those add-ons. Use Velofy's Tax Calculator to model your specific position, and the Medicare Levy + MLS Calculator to check whether your Stage 3 saving is offset by the surcharge if you sit above the $101k threshold without hospital cover.

Three smart moves with your Stage 3 saving (before 30 June 2026)

You have already received the FY2024-25 saving. The FY2025-26 saving is landing in your pay packet right now. Five weeks remain before EOFY 2026 to make the cumulative amount work harder than sitting in a transaction account.

1. Throw it into your mortgage offset (highest after-tax return)

For most homeowners on a standard 6.2% variable rate, every dollar in an offset account saves 6.2c per year in interest. A $5,000 Stage 3 saving parked in offset for the next 12 months saves $310 in interest — and that saving compounds because the principal balance falls faster. Plus the offset interest is effectively tax-free (you're not earning it, you're not paying it), unlike savings account interest taxed at your marginal rate.

2. Top up super before 30 June (second tax benefit)

A personal deductible super contribution of $5,108 (Sarah's two-year Stage 3 saving) at her 30% marginal rate triggers a further $1,022 tax refund in her FY2025-26 return. Inside super, the $5,108 is taxed at 15% — so the net contribution after super tax is $4,342, but the combined refund + super lift is worth roughly $4,342 + $1,022 = $5,364 of value from $5,108 deployed. Use the carry-forward concessional cap if your total super balance is under $500,000 at 30 June 2025.

3. Park it in a high-interest savings account (lowest friction)

The big four currently advertise 4.5-5.0% intro rates on high-interest savings accounts; ING, ME, and Macquarie offer 5.0-5.5% with bonus rate conditions. After 32% marginal tax on the interest (Stage 3 + Medicare Levy at the $45k-$135k bracket), the after-tax yield is roughly 3.1-3.7% — comfortably above current CPI inflation around 2.7%. Better than transaction-account default of 0.05%.

Want to see what the saving becomes over 10–20 years? Run a monthly contribution through the compound interest calculator (it shows the inflation-adjusted real value, not just the nominal balance), or — if you invest in index funds — the ETF projection calculator models VAS, VGS, IVV and A200 using verified 5-year returns after fees.

Two myths that cost Australians money

What changes on 1 July 2026 — the full list

1 July 2026 is the biggest single-day tax-and-super refresh in the past decade. Four things change at once, and all four compound for higher earners. Here is the complete list with dollar impact at common incomes:

The 1 July 2026 income tax cut, exactly

The 16% bracket between $18,200 and $45,000 drops to 15%. That is a 1 percentage point cut on a $26,800 band of taxable income. The maximum saving is $268 per year ($26,800 × 1%), and you get the full amount once your taxable income reaches $45,000. Below $45,000, the saving scales linearly with income above $18,200.

Combined with the Stage 3 cut already in your pay since 1 July 2024, here is your cumulative annual saving from 1 July 2026 compared to the pre-Stage 3 brackets:

• $45,000: $804 (Stage 3) + $268 (1 July 2026) = $1,072/yr
• $80,000: $1,679 + $268 = $1,947/yr
• $100,000: $2,179 + $268 = $2,447/yr
• $135,000+: $3,729 + $268 = $3,997/yr (up to $4,797 at $190k+)

A second cut to 14% from 1 July 2027 is already legislated in the same Treasury Laws Amendment Act, doubling the bottom-bracket saving to $536/yr.

The super cap increase: the most under-discussed change

The concessional contributions cap rises from $30,000 to $32,500 on 1 July 2026 — a $2,500 increase. If you salary-sacrifice the additional $2,500:

• It reduces taxable income by $2,500, saving you $750-$1,125 in tax depending on your marginal rate (30%/37%/45%).
• It enters super taxed at 15% inside the fund — versus your marginal rate outside it.
• Compounded at 7% real return over 25 years, that single year's extra $2,500 contribution is worth $13,567 in retirement balance (real dollars).

Use the salary sacrifice calculator to model the exact cents-per-$1 tax saving at your Stage 3 marginal rate, the super calculator for full retirement projection, and the job offer comparison calculator if you are weighing two jobs where super % differs — every 1% extra super compounds against the new cap headroom.

Payday super: how it actually affects you

From 1 July 2026, employers must pay super at the same frequency as your salary — most commonly fortnightly instead of the quarterly cycle that has existed for 30+ years. The dollar effect on take-home is zero (it is the same amount paid more often), but the compounding effect on retirement balance is real: each contribution starts earning returns 6-8 months earlier than under the old quarterly cycle.

For a 30-year-old on $90,000 with SGC at 12%, that earlier compounding adds roughly $8,500 to retirement balance over a 35-year career at a 7% real return. If your employer has been late on super historically, payday super also makes it visible faster — the ATO publishes employer payment records via myGov, and unpaid super now triggers penalties within days, not quarters.

One thing that is NOT changing: the SGC rate

There has been persistent misinformation about a 12% → 12.5% Super Guarantee increase on 1 July 2026. This is incorrect. The SGC reached its final legislated rate of 12% on 1 July 2025. No further increase is scheduled. Source: ATO — How much super to pay.

The detail nobody mentions: PAYG vs final tax

Employer payroll software calculates PAYG withholding using ATO withholding schedules updated each July. When Stage 3 landed on 1 July 2024, the ATO published new schedules on 12 June 2024 — most major payroll providers (Xero, MYOB, Reckon, ADP) auto-updated within the following two weeks. Workers paid before the update sometimes had one or two pay cycles at old withholding rates; the over-withheld amount returned in the FY2024-25 tax refund.

If you started a new job mid-2024 or your payroll provider was slow, check your year-to-date PAYG against the Stage 3 brackets in the table above. A material gap (more than $200) is worth flagging with your employer or claiming via your tax return.