Are you still Eligible? Tax Offset Changes to Low and Middle Income Earners

Please Note: This post was first published by the Australian Taxation Office. Click here to read the original post.

Check eligibility for the low income tax offset or low and middle income tax offset in the 2019 to 2022 income years.

On this page

• Eligibility for the tax offsets
• Low income tax offset (LITO)
• Low and middle income tax offset (LMITO)

Eligibility for the tax offsets

From 1 July 2022 you may be eligible for the low income tax offset only, if you earn up to $66,667.

Between 2018–19 and 2021–22, you may have been eligible to receive one or both of the:

• low income tax offset – if you earn up to $66,667
• low and middle income tax offset – if you earn up to $126,000.

LMITO ended on 30 June 2022. The last year you can receive it is the 2021–22 income year.

To be eligible, you need to:

• be an Australian resident for tax purposes
• pay tax on your taxable income
• have a taxable income below certain income thresholds.

Receiving the tax offsets

You don’t need to do anything to claim either of these tax offsets, except lodge your tax return. We work out the offsets after you lodge.

You can see the tax offset amount on your notice of assessment at Less non-refundable tax offsets.

These offsets reduce the tax you need to pay. They can only reduce your tax payable to $0. They are not a separate payment. Any unused offsets can’t be refunded.

Low income tax offset (LITO)

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.

We will work out your offset and reduce your tax payable by this amount.

Low and middle income tax offset (LMITO)

LMITO ended on 30 June 2022. The last year you can receive it is the 2021–22 income year.

LMITO is not available for the 2022–23 income year and later income years.

For the 2018–19 to 2021–22 income years, in addition to the LITO, you could receive the LMITO.

You receive LMITO if your taxable income is less than $126,000. You must also be an Australian resident for tax purposes. You will not receive it if your taxable income is $126,000 or more. We will work out your offsets and reduce your tax payable by this amount.

LMITO not available 2022–23 income year onwards

Low and middle income tax offset (LMITO) ended on 30 June 2022. This means it doesn’t apply for the 2022–23 income year.

Your tax return outcome may be different this income year. You may have a lower refund (less than when LMITO was available) or you may receive a tax bill. See Why your tax return outcome may change in 2023.

LMITO amounts 2021–22 income year

The LMITO was increased by $420 (a one-off $420 cost of living tax offset) for the 2021–22 income year.

This increases the base amount to $675 and the full amount to $1,500.

Examples of how the offsets reduce your tax

The following examples show how the offsets can reduce the tax you pay.

LMITO amounts 2018–19 to 2020–21 income years

The LMITO amount for the 2018–19, 2019–20 and 2020–21 income years remains the same at between $255 and $1,080.

The amount of offset you receive depends on your circumstances, such as your taxable income and how much tax you have paid throughout the income year.

The 2021–22 income year is the last year for the LMITO – it will not be available for future income years.

The tables below show the amount of LMITO you can receive. This depends on the income year and your taxable income.