End of Low & Middle Income Tax Offsets in 2023

End of Low & Middle Income Tax Offsets

The Low and Middle Income Tax Offset (LMITO) is gone, and it has been gone for longer than most people think. It is still the single most common explanation we give for a refund that came back smaller than the year before.

What is the Low and Middle Income Tax Offset?

Australian Taxation Office (ATO) introduced the offset for those recognised as Australian residents for income tax purposes earning under $126,000 as part of a tax cut plan. Between the 2019 and 2021 financial years, the offset amount stayed between $255 and $1080. ATO increased it by $420 for the 2022 financial year, to assist with the increase cost of living.

When it ended

The last income year LMITO could be claimed was 2021-22. It ended on 30 June 2022 – not 2023 – and it was not extended or replaced. For most people that meant up to $1,500 less in the 2022-23 refund than the year before, with no change in their own circumstances to explain it.

What still exists

The low income tax offset (LITO) is a different thing and is still current – see what tax offsets are and how they work for the broader picture: up to $700 where taxable income is $37,500 or less, shading out to nil at $66,667. It applies automatically – there is nothing to claim and nothing to do.

If you want the current brackets, thresholds and offsets in one place, our guide to income tax rates, the Medicare levy and SAPTO is kept up to date. The ATO also publishes the LMITO history.

Let us help you with your deductions

At BTMH, we are here to help you navigate these tax changes and maximise your deductions. Our team of experienced professionals can provide expert guidance tailored to your unique financial situation. Contact us today to schedule a consultation and ensure you make the most of your tax return. Don’t miss out on potential savings – let us assist you in achieving your financial goals.