LITO Calculator Australia 2024-25

Australia LITO: Low Income Tax Offset for 2024-25

The Low Income Tax Offset (LITO) is a tax offset available to Australian resident individuals with taxable income below $66,667. For FY 2024-25 the maximum LITO is $700, which completely eliminates income tax for individuals earning up to approximately $21,884 (once combined with the tax-free threshold). The ATO applies LITO automatically — you do not need to claim it separately in your tax return.

The LITO is means-tested and reduces at two different rates as your income rises. From $37,500 to $45,000, the offset reduces by 5 cents per dollar (the faster taper). From $45,000 to $66,667, it reduces by 1.5 cents per dollar until it reaches zero. This two-stage withdrawal means that low-income earners near the $37,500 threshold face a higher effective marginal rate as the offset phases out.

LITO is not refundable — it can only reduce your tax liability to zero but cannot produce a refund on its own. It also applies only to Australian residents. Non-residents for tax purposes are not entitled to LITO and also do not receive the $18,200 tax-free threshold.

Stage 3 Tax Cuts — What Changed from 1 July 2024

The Stage 3 tax cuts came into effect on 1 July 2024, meaning they apply for the full FY 2024-25 year. The redesigned Stage 3 package made the following changes to individual tax rates compared to the previous year:

• The 32.5% rate on income from $45,001 to $120,000 was reduced to 30% and the upper threshold extended to $135,000 — meaning more income is taxed at the lower rate
• The 19% rate on income from $18,201 to $45,000 was retained (unchanged)
• The 37% rate now applies from $135,001 to $190,000 (previously $120,001 to $180,000)
• The 45% rate on income over $190,000 was retained (threshold raised from $180,000)
• The tax-free threshold of $18,200 was retained (unchanged)

For a taxpayer on $90,000, the saving under Stage 3 is approximately $1,125 per year compared to FY 2023-24. For someone on $120,000 the saving is approximately $1,875. At $150,000 the saving reaches roughly $3,000. Use the calculator above to see your exact Stage 3 saving based on your income.

The 2% Medicare levy continues to apply on top of the income tax rates above for Australian residents. A Medicare levy low-income threshold means individuals earning below approximately $26,000 pay a reduced or nil Medicare levy.

LMITO Has Ended — What Replaced It?

The Low and Middle Income Tax Offset (LMITO) provided an additional tax reduction of up to $1,500 per year for incomes between $18,200 and $126,000, but it was a temporary measure that ended after FY 2021-22. The LMITO was not extended for FY 2022-23 or any subsequent year. If you are filing for 2022-23 or later, there is no LMITO to claim.

The Stage 3 tax cuts were the government's replacement for the LMITO for middle-income earners. However, unlike the LMITO (which was a direct cash-equivalent offset), the Stage 3 cuts work through permanently lower tax rates, which provide a lasting structural reduction rather than a one-off annual boost.

For low-income earners, the existing LITO of up to $700 remains the primary offset in FY 2024-25. The Senior Australians and Pensioners Tax Offset (SAPTO) also remains available for eligible seniors — single seniors can receive up to $2,230 in SAPTO if their income is below $50,119, while couples can each receive up to $1,602 if their combined income is below $83,580. SAPTO is handled separately by the ATO as part of the tax return process for eligible individuals.

It is also important to note that the Seniors and Pensioners Tax Offset (SAPTO) can be transferred between spouses in certain circumstances, potentially allowing a higher-earning senior spouse to benefit from the unused SAPTO of a lower-earning spouse. The calculator above flags SAPTO eligibility based on age but does not calculate the full SAPTO amount, as it depends on circumstances beyond taxable income alone.