Low and Middle Income Tax Offset

Low and Middle Income Tax Offset “LMITO” formulae for the years 2019 to 2022.

LMITO formula from 1 July 2018 to 30 June 2022

up to $37,000$255
$37,001 to $48,000$255 plus 7.5 cents for each dollar over $37,000
$48,001 to $90,000$1,080
$90,001 to $126,000$1,080 less 3 cents for each dollar over $90,000

The Low and Middle Income Tax Offset is valued at $255 on low incomes up to $37,000. The offset is increased at the rate of 7.5% of income above $37,000 up to $48,000. Incomes above $48,000 to $90,000 have an offset of $1,080. For incomes above $90,000 the offset is withdrawn at the rate of 3% of income above $90,000. On incomes above $126,000 there is no offset.

The LMITO formula is included in our free excel spreadsheet calculator. Get it here.

How LITO and LMITO low income tax offsets are calculated.
The Low Income Tax Offset and Low & Middle Income Tax Offset Formulae for the current year

The Low and Middle Income Tax Offset (LMITO) is a tax offset introduced as part of the Budget 2018 measures to revise the personal income tax rates, and subsequently extended to 2021-22.

How To Claim Low And Middle Income Tax Offset

As with the Low Income Tax Offset (LITO), the Low and Middle Income Tax Offset is calculated based on taxable income, and does not require the taxpayer’s initiative to claim, other than simply lodging a tax return with correct income details.

The offset is automatically included in your tax assessment calculation.

The effect of the low income tax offsets is to raise the tax free threshold for most taxpayers.

Legislation for this measure was originally approved by parliament in June 2018, and was increased by the Budget 2019 legislation passed on 4 July 2019.

The years of application were subsequently extended to 2021 and 2022 in the 2020 and 2021 budgets respectively.

The original LMITO base amount was increased from $200 to $255; and the maximum amount increased from $530 to $1080. Revised taxable income tests were also applied.

The LMITO applies in addition to the Low Income Tax Offset (LITO). The offset is paid in arrears, which means it doesn’t turn up until you get your tax assessment after the end of the financial year.

This page was last modified 2021-05-14