Graph reveals how Anthony Albanese’s changes to Stage 3 tax cuts will hit you

Millions of Australian workers earning between $45,000 and $135,000 are set to enjoy an extra $804 a year under the PM’s tweaked Stage 3 tax cuts.

Prime Minister Anthony Albanese plans to rob the rich to upsize tax cuts for most workers under planned changes that will deliver a worker on $100,000 an extra $2179 a year.

The Robin Hood tax strategy is emerging as Labor MPs gather in Canberra to learn of the changes which are believed to include reducing the lowest tax bracket of 19 cents in the dollar to 16 cents.

The 37 per cent tax rate will also remain in place slashing the benefits for workers earning over $150,000.

But the biggest losers are workers earning $200,000 or more who will see a planned $9075 annual tax cut slashed in half to just $4546.

A new analysis of the planned tax cuts commissioned by news.com.au based on what we know so far suggests that workers earning between $45,000 and $135,000 will secure an extra $804 a year.

But when you combine that with what they were already going to get under the original changes a worker earning $100,000 was going to get a $1375 tax cut and will now secure $2179.

Based on the parameters we currently know the Australian National University crunched the numbers and the results suggest that even workers earning $140,000 will secure an extra $454 a year under the changes.

ANU Associate Professor Ben Phillips told news.com.au that the tax changes made sense but were “brutal” for higher income earners.

“One could say brutal,’’ Prof Phillips said.

“It’s a big tax increase relative to the original plan. But if I was redesigning Stage 3 it’s ended up where it should — returning bracket creep to most workers.

“The main problem was doing too much for high income earners and nothing for low income earners.

“That seems now to be addressed.”

Anthony Albanese plans to rob the rich to upsize tax cuts for most workers. Picture: NCA NewsWire / Martin Ollman

But if you earn $150,000 you go backwards compared to what you were promised at the election and are worse off by $250 a year.

If you earn $180,000 your promised tax cut will be slashed by $2346 a year. If you earn $200,000 you will be worse off by $4546.

By lowering the 19 per cent tax rate to 16 cents in the dollar, it will deliver a tax cut to “everyone” with earnings between $19,000 and $45,000.

Mr Albanese also proposes to reduce the 32.5 per cent tax bracket to 30 cents in the dollar for earnings between $45,000 and $135,000.

But the big change that will hit higher income earners is that Mr Albanese and his Treasurer Jim Chalmers will no longer abolish the 37 per cent tax rate. This legislated change would have delivered a flat 30 per cent tax rate for all earnings between $45,000 and $200,000.

Instead, the 37 per cent tax rate will still apply for earnings between $135,000 and $190,000.

As Labor MPs gather in Canberra today for a briefing on the changes Mr Albanese has conceded for the first time that low and middle earners are going to get a better tax cut while declining to challenge reports that some workers earning over $150,000 a year will be worse off.

Peter Dutton is set to pounce on the PM for breaking an election promise. Picture: NCA NewsWire / Dylan Coker

Deputy Opposition Leader Sussan Ley pledged the Coalition will roll back any changes made by Anthony Albanese on the stage three tax cuts if they win the next election.

“This is absolutely our position. And the point is, it was Labor’s position too. The promise that’s been made, the promise that’s been broken, the lies that have been told to the Australian people,” she told Sky News.

“All of this has been decided without proper consultation with the Australian people.

“The election was won on a lie.”

SA Premier Peter Malinauskas backed giving low and middle income earners more during an interview on the Today show but said he was concerned about taking money off the rich if it was an election promise.

“Let’s wait and see what the Prime Minister announces. But Middle Australia has been wearing too much and shouldering too much of the burden. And that does require change. And let’s see what comes out,’’ Mr Malinauskas said.

“Um do you think broken promises are all right?,’’ host Karl Stefanovic asked.

“I think they’re better avoided,’’ the SA Premier replied.

“Enough said, Premier,’’ Stefanovic replied.

SA Premier Peter Malinauskas backed giving low and middle income earners but said it was a bad idea to break a promise. Picture: NCA NewsWire / Ben Clark

NSW Premier Chris Minns also backed the changes. Picture: NCA NewsWire / Gaye Gerard

NSW Premier Chris Minns backed the changes.

“I do think that if you look at a typical family in western Sydney, about one-third of households are paying off a mortgage at the moment, interest rate rises particularly smashed their budgets and something needs to be done for them,” he told Sky News.

Mr Albanese dropped a big hint about the proposed changes this week while refusing to concede he was preparing to break a key election promise.

“If we can find ways to put extra dollars in people’s pockets, particularly those lower middle income earners who are doing it tough, then we are prepared to do so,” Mr Albanese told Sky News.

The Prime Minister’s office has repeatedly insisted there were no current plans to alter the tax cuts – a claim now proven to be false.

It has also suggested some of the speculation was “wrong” – while refusing to rule out changes.

Originally published as Graph reveals how Anthony Albanese’s changes to Stage 3 tax cuts will hit you