Bracket creep and its fiscal impact
By Australian Parliamentary Budget Office
Bracket creep is a term that describes a situation where income growth causes individuals to pay higher average income tax rates each year. It is one result of a tax system which features a number of tax ‘brackets’. The brackets involve tax rates that increase with income and which do not change over time unless the government introduces new policies.
This ‘explainer’ examines the impact of bracket creep from the perspective of both individuals and government finances.
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