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Both Labor and the Coalition have unveiled significant tax policies in an attempt to woo voters with the federal election now less than three weeks away.
Prime Minister Anthony Albanese revealed an instant deduction that is expected to benefit just under six million workers, while Opposition Leader Peter Dutton announced a one-year offset for more than 10 million taxpayers.
So how would either policy work, how much would you benefit from them, and how much will they cost the budget? This is what you need to know.
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Labor's tax deduction
Let's start with the incumbent government's offering.
If Labor is re-elected, it will legislate what it calls the "instant tax deduction", starting in the 2026-27 tax year.
Under this scheme, rather than having to save receipts and submit a series of deductions for individual work-related expenses, taxpayers can instead claim a blanket $1000 deduction to their taxable income.
People with more than $1000 in deductions will be able to continue making those claims as they have in previous years.
The policy was originally proposed in the Henry Review, a 2010 report chaired by then-Treasury secretary Ken Henry that provided a blueprint to reform Australia's tax system, but whose recommendations were almost universally ignored.
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How many people will benefit from the deduction?
If you claim less than $1000 in tax deductions each year, you'll benefit from a lower taxable income, resulting in a smaller tax bill, as well as from a simpler tax return that takes less time to complete and doesn't require you to save receipts for your deductions.
Labor says the number of people who'll be better off under the scheme is about 5.7 million – just under 40 per cent of all taxpayers.
To be eligible, taxpayers will need to be earning labour income – that is, if you just earn money on a business or investment, you'll have to keep claiming deductions in the normal way.
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How much will I get from the deduction?
Exactly how much each taxpayer benefits from the scheme depends on how much they earn.
Labor says the average tax saving will be $205, but that most of the benefit will be directed to low-and middle-income earners.
It says someone earning between $45,001 and $135,000 could see their tax bill shrink by up to $320 a year under the policy.
However, the government has also been quick to promote the other savings associated with its scheme.
"The time saving alone from reducing the burden of record keeping on millions of taxpayers is estimated to be worth about $200 million a year," it said.
When will the policy start and how long will it last?
If Labor is re-elected on May 3, the instant deductions will begin in the 2026-27 financial year.
As a permanent policy, it has no end date.
How much will it cost the budget?
Labor says its policy will cost $2.4 billion over four years.
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Coalition's tax offset
Now for the Coalition's offering: under the "cost of living tax offset" Peter Dutton is promising a tax offset of up to $1200 for low- and middle-income earners next financial year if the Liberals and Nationals are voted into government at the election.
It will see Australians who earn $144,000 or less have a reduced tax bill for that year – significantly so for many of those taxpayers.
This is essentially a slightly less generous repeat of the Morrison government's low and middle income tax offset (LMITO, or sometimes referred to as the "lamington") that was expanded ahead of the 2022 federal election, which provided an offset of between $675 and $1500 to eligible taxpayers.
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How many people will benefit from the offset?
Anyone earning up to $144,000 in 2025-26 will be eligible for some form of offset. According to the Coalition, that's more than 10 million Australians – about 85 per cent of all taxpayers.
How much will I get from the offset?
How much of an offset someone gets will depend on how much they earn next year.
Someone taking home up to $37,000 will benefit to the tune of "up to $265", according to the Coalition, although it hasn't said exactly how that will be calculated.
The offset then gradually rises to the point where people earning $48,001 to $104,000 will get $1200, and then gradually decreases until people earning more than $144,000 won't benefit.
The full details can be seen here:
Taxpayers won't have to apply for the offset, it will automatically be applied to their tax bill.
When will the policy start and how long will it last?
If the Coalition is elected on May 3, it will introduce its tax offset just for the 2025-26 financial year. It won't be extended beyond that.
How much will it cost the budget?
The Coalition says its policy will cost $10 billion for one year.
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