The majority of taxpayers will be better off from the recent budget proposals. And in some cases will be paying no income tax. A few taxpayers will however be paying more income tax.
In the government’s 2022/23 Income tax Budget changes, personal income allowance increased from $18,000 to $25,000, while annual allowances have been capped at $30,000. Annual allowances include claims like mortgage interest relief, house insurance, and repairs and maintenance on homes. In addition, changes have also been made to the income tax bands, now reduced to three instead of four with the lower rate of income tax set at 15% for the first $10,000 of taxable income instead of 10%.
With the new changes, taxpayers earning up to $2083 per month will pay no income tax. In addition, taxpayers earning up to $4000 per month and making mortgage interest payments of $1800 per month will also pay no income tax.
However, taxpayers who fall within the 30% marginal rate of tax will pay more tax if they are used to claiming annual allowances in excess of $30,000. For this group, they will pay an additional $300 in tax for every $1000 in annual allowances above the $30,000 cap.
And for those unaffected by the annual allowance cap of $30,000, they will save $100 annually.
The 2022/23 income tax Budget proposals will result in more winners than losers, with the higher-income taxpayers being asked to pay more.
