The Stage 3 tax cuts came into effect on 1 July 2024, and the full impact has now been working through Australian household budgets for two financial years. For traders earning above-average incomes — which is most active retail traders — the brackets that determine what you pay on trading profits are very different from where they were a few years ago. This guide walks through what changed, how the new brackets affect different categories of trading income, and the strategic implications that often get missed in the headline coverage.
What actually changed
The Stage 3 cuts collapsed five tax brackets into four and lifted the thresholds where each rate kicks in. The headline change for Australian traders is the 32.5% bracket disappearing and being replaced with a 30% rate that now applies all the way up to $135,000 of taxable income. The top 45% rate now only applies above $190,000, up from $180,000 previously.
For an Australian earning $120,000 from salary plus trading, the marginal rate on additional income dropped from 37% to 30%. That’s a meaningful change to how each dollar of trading profit is taxed.
The 2025–26 tax brackets in detail
For Australian resident individuals in the 2025–26 financial year:
- $0 – $18,200: 0% (tax-free threshold)
- $18,201 – $45,000: 16%
- $45,001 – $135,000: 30%
- $135,001 – $190,000: 37%
- $190,001 and above: 45%
Medicare levy of 2% applies on top for most Australian residents, and the Medicare Levy Surcharge can add another 1–1.5% for higher earners without private health insurance.
How the new brackets affect trading income
Different categories of trading profit hit different brackets, so the practical impact varies.
Short-term capital gains
If you sell crypto, shares, or other CGT assets within twelve months, the gain is added to your taxable income with no discount. For a trader in the $80,000–$135,000 bracket, every dollar of short-term gain now costs 30% instead of the previous 32.5–37%. On a $10,000 short-term gain that’s a tax saving of roughly $700.
Long-term capital gains
Hold for more than twelve months and the 50% discount applies (until July 2027 when this changes). Only half the gain hits your taxable income. A $10,000 long-term gain becomes $5,000 of assessable income, taxed at your marginal rate. In the new 30% bracket that’s $1,500 instead of the $1,625–$1,850 it would have been pre-Stage 3.
Ordinary income from crypto
Staking rewards, airdrops (other than initial allocations), mining income, and DeFi yields are taxed as ordinary income at marginal rates. No discount applies. These benefit from the new brackets the same way salary does — meaningfully if you sit in the bands that moved.
Forex and CFD profits
The ATO typically treats forex and CFD profits as ordinary income, particularly for active traders. That puts the entire profit in the marginal rate calculation with no CGT discount available. The Stage 3 cuts help here too, but the absence of any discount means the effective tax rate is higher than for share or crypto investors.
Strategic implications most traders miss
The wide 30% bracket creates planning opportunities
The 30% rate applies from $45,001 all the way to $135,000. That’s a $90,000 band sitting at one rate. For traders who can control the timing of when they realise gains, this band is the sweet spot. Realising profits while you’re inside it costs less than pushing into the 37% band above it.
The 37% to 45% jump now happens later
The top 45% rate now starts at $190,000 instead of $180,000. For higher-earning traders that’s an extra $10,000 of room before hitting the top rate — not a huge buffer, but enough to matter when planning the timing of large disposals.
Inflation has muted the real benefit
Wage growth and inflation have pushed many traders’ nominal incomes higher since the cuts were announced. Some are paying more tax now than they would have under the old structure simply because their income has grown into the higher bands. The cuts are real but bracket creep has eaten part of the benefit.
The cuts contributed to the RBA tightening
The extra take-home pay across Australian households added to consumer demand right when the RBA was trying to bring inflation down. That’s part of why the cash rate is at 4.35% in May 2026 — the very rates that are squeezing growth stocks and feeding through into your mortgage. The cuts didn’t cause the rate hikes by themselves, but they were a contributing factor the RBA has flagged.
Worked example: an active trader
Take an Australian trader with $95,000 salary and a $15,000 net trading gain for FY2025–26, made up of $8,000 in short-term crypto gains and $7,000 in long-term ASX share gains.
The $7,000 long-term gain gets the 50% CGT discount: $3,500 added to taxable income. The $8,000 short-term gain adds in full. Total taxable income: $95,000 + $3,500 + $8,000 = $106,500. All of that sits inside the 30% bracket.
Compare to pre-Stage 3 rules where the upper portion would have been in the 32.5% or 37% bracket. The trader saves roughly $1,500–$2,000 in tax for the same trading activity. That’s not life-changing money, but it’s real, and it stacks year after year for traders who stay in this income range.
What to do with this information
- Know which bracket you’re in. Your trading decisions look different at 30% than at 37%. Estimate where your taxable income will land for the year before making major disposal decisions.
- Time gains to stay inside the 30% band where you can. Splitting a large gain across two financial years to avoid breaching $135,000 in either year can save thousands.
- Don’t ignore the Medicare Levy Surcharge. If your trading pushes you over the surcharge thresholds, the effective cost of that profit is higher than the brackets alone suggest.
- Remember the 12-month rule still works. Until July 2027 the 50% discount is the most powerful tax tool retail traders have. Holding for twelve months halves the effective rate on a gain.
- Talk to a tax agent if your trading income is significant. The brackets, the surcharge, the CGT discount, and the structures available (SMSF, family trust, company) interact in ways that benefit from professional advice.
The bottom line
The Stage 3 cuts moved the goalposts on what Australian traders pay. The 30% bracket from $45,000 to $135,000 is the new strategic zone — wide, generous by historical standards, and the band most active retail traders will spend most of their working lives inside.
Combined with the 50% CGT discount that’s still available until July 2027, this is one of the more favourable tax environments Australian retail traders have had access to in a generation. Use it before the next round of changes shifts the rules again.
For the companion piece on the CGT discount being scrapped from July 2027, see our guide here. For practical EOFY tax-loss harvesting, see our June 30 guide. For lodgement step-by-step, see our myTax filing guide. To see how Impulse Cashholm helps with cleaner records that feed into your annual return, head to How It Works or the FAQ.
This article is general in nature and does not constitute tax, legal, or financial advice. Tax brackets and ATO rules change. Speak to a registered tax agent or qualified accountant for advice tailored to your situation before acting on any strategy.