TAXPL027 Don't let tax creep up on you (510 words)

This article explains the little understood concept of “bracket creep”. It recommends seeking professional guidance when it comes to finding an individual solution.

Australia has a progressive income tax system. This simply means that higher income earners pay a greater proportion of their income in tax than low-income earners. It is achieved by applying a different rate of tax to each income band or “bracket”. 

For example, if you earn $25,000 per annum you’ll pay $1,330 in tax, or 5.3% of your total taxable income. Earn $80,000, however, and your tax bill jumps to $17,547, or 21.9% of your taxable income.

Where it becomes creepy...