The following are key points from the Australian Federal Budget 2025–26 (handed down on 25 March 2025) and explain how they might affect you or your business. If you would like further details on any of these points please contact our office.
Headline Budget Measures
- Cost-of-Living Relief: Energy bill rebates will continue, with two additional $75 quarterly payments in 2025 for households and small businesses. The PBS co-payment for medicines will drop to $25 per prescription from 1 January 2026.
- Tax Relief for Individuals: New personal income tax rate reductions from 2026 and 2027 aim to ease bracket creep and boost disposable income.
- Housing and Renters: The Help to Buy scheme will expand, with higher income and property price caps. Tax incentives will support build-to-rent developments, and reforms will limit rent increases.
- Healthcare Investment: $7.9 billion will be invested to expand bulk billing and improve access to care. New funding supports public hospitals and aged care reforms.
- Support for Small Business: Energy efficiency grants of up to $25,000 will be available. Beer excise increases will be paused, and alcohol tax rebates will rise from 1 July 2026.
- Student Debt Relief: A proposed 20% reduction in HELP debts and a fairer repayment system could ease the burden on graduates.
Personal Income Tax
- Tax Rate Changes: From 1 July 2026, the 16% tax rate on incomes from $18,201 to $45,000 will drop to 15%, and to 14% from 1 July 2027. This provides modest relief, especially for lower- and middle-income earners.
- LMITO Not Returning: The Low and Middle Income Tax Offset (LMITO) has not been reinstated.
- Medicare Levy Thresholds: These have increased to account for inflation. For example, singles will now pay the levy only if income exceeds $27,222.
- Residency Rules: No changes to residency tests have been announced.
Business Taxation
- Instant Asset Write-Off Ending: The $20,000 threshold for instant write-offs ends 30 June 2025. After this, the threshold reverts to $1,000.
- Energy Efficiency Grants: Small and medium businesses can apply for grants up to $25,000 to improve energy use.
- ATO Compliance: Nearly $1 billion will fund compliance programs targeting multinationals, underreported income, and high-risk practitioners.
- No Company Tax Rate Change: The 25% rate for small businesses and 30% for larger ones remains.
Superannuation
- Contribution Caps: No changes to annual caps.
- Super Guarantee Increase: The SG rate will rise to 11.5% from 1 July 2024, and 12% from 1 July 2025.
- Payday Super: From 1 July 2026, super must be paid at the same time as wages.
- High Balance Tax Proposal: A proposed extra 15% tax on earnings for super balances over $3 million is not yet law.
- Super on Paid Parental Leave: From 1 July 2025, super will be paid on government parental leave.
Healthcare Sector Impacts
- Bulk Billing Incentives: An extra $7.9 billion will expand incentives for GPs, aiming to make 90% of visits bulk-billed by 2030.
- PBS Changes: Co-payments drop to $25. New listings will include treatments for cancer, mental health, and women’s health.
- Workforce Support: More GP training spots, nurse scholarships, and funding for Medicare Urgent Care Clinics.
- Infrastructure: Investments in My Health Record, medical cost transparency, and MRI access.
Welfare, Aged Care & Family Support
- Childcare Reform: From January 2026, families earning under $533,280 will have access to at least three days of subsidised childcare per week, regardless of work activity.
- Paid Parental Leave: Continuing expansion to 26 weeks by July 2026. Superannuation will be added to payments from mid-2025.
- Aged Care: $292 million supports aged care reforms, including funding for a 15% wage rise for workers.
- Welfare Payments: No new increases beyond regular indexation.
- Student Loans: Proposed 20% HELP debt reduction and a higher repayment threshold, subject to legislation.
Inflation, Deficit & Economic Outlook
- Inflation: Expected to fall to 3% in 2025–26 and return to target by mid-2025.
- GDP Growth: Projected at 1.5% in 2024–25, rising to 2.25% in 2025–26.
- Unemployment: Forecast to rise slightly to 4.25%, still historically low.
- Budget Deficit: $42.1 billion forecast for 2025–26. Debt projected to peak at 37% of GDP.
In Summary:
Healthcare is a standout winner with major funding boosts, and small business support focuses on energy efficiency. If you have any questions about how these changes apply to your situation, feel free to get in touch.
