LOW & MIDDLE INCOME TAX OFFSETS – LESS
LOW & MIDDLE INCOME TAX OFFSET (LMITO)
- LMITO is NOT available for the 2022–23 income year.
This means that millions of Australians will likely get less money back in their tax return this year compared to the last 2 years.
The largest tax offset of $1500 was available to workers earning between $48,000 and $90,000.
| Income | Tax increase without the LMITO |
| $18,000 | $0 (No tax paid) |
| $37,000 | $675 |
| $45,000 | $1275 |
| $60,000 | $1500 |
| $80,000 | $1500 |
| $90,000 | $1500 |
| $100,000 | $1200 |
| $120,000 | $600 |
| $126,000+ | $0 (Not eligible for offset) |
The temporary LMITO was introduced in the 2018-19 budget, extended during the pandemic, and then increased by the Morrison government during its pre-election March 2022 budget for a single year. Neither Labor nor the Coalition had ever planned for it to be retained for 2022-23 or beyond.
Will the tax offset come back?
There is no plan to bring back this particular tax offset. However, there are additional tax changes set to come into action from 1 July 2024 that will see millions of Australians pay less tax.
These are known as the stage 3 tax cuts, and they largely benefit high income earners.
These tax cuts will basically remove the $120,001-$180,000 tax bracket entirely, and reduce the 32.5% tax bracket down to 30%.
This means that, as of 1 July 2024, everyone earning between $45,001 and $200,000 will be taxed at the same rate of 30%.
The amount of low income tax offset (LITO) you receive will depend on your taxable income. If you earned:
- $37,500 or less, you will get the maximum offset of $700
- between $37,501 and $45,000, you will get $700 minus 5 cents for every $1 above $37,500
- between $45,001 and $66,667, you will get $325 minus 1.5 cents for every $1 above $45,000.