Tax Cuts for FY25 | How will it affect borrowing power

Starting from the 2024-25 financial year, the new tax thresholds will be:
$0 to $18,200 – 0 cents in the dollar
$18,201 to $45,000 – 16c.
$45,001 to $135,000 – 300c.
$135,001 to $190,000 – 37c.
$190,001 and above – 45c.
The current thresholds are:
$0 to $18,200 – 0c.
$18,201 to $45,000 – 19c.
$45,001 to $120,000 – 32.5c.
$120,001 to $180,000 – 37c.
$180,001 and above – 45c.
For a family with a combined income of around $130,000, where one partner earns $80,000 and the other earns $50,000, their combined tax cut will be over $2,600 per year, or about $50 per week, according to government modelling.

Good News for Borrowing Power

The upcoming tax cuts could significantly increase your borrowing power, potentially by tens of thousands of dollars, depending on your household income.
Here’s why: With a higher post-tax salary, you have more money available to service a mortgage. Consequently, banks are generally willing to lend you more.
PropTrack senior economist Paul Ryan notes that borrowers on lower incomes will particularly benefit. “Many people are currently constrained by borrowing capacities, especially first-home buyers,” he said. “First-home buyers are facing tough conditions with higher interest rates and limited borrowing capacities. These tax cuts will likely provide a boost to the market, especially at the lower end.”
If you’re curious about how your borrowing power might change from 1 July, get in touch. You may contact us to help you figure out how much will be your new borrowing power.
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Tax Cuts for FY25 | How will it affect borrowing power

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