The Australian Federal Budget for 2025-26 introduces several key reforms and initiatives that will impact individuals, families, businesses, and the economy. These measures aim to provide financial relief and stimulate economic growth while ensuring long-term fiscal sustainability.
Key Highlights
- Personal Income Tax Cuts The Government will deliver new tax cuts starting from July 2026, reducing the tax rate for the $18,201–$45,000 bracket from 16% to 15%, and further to 14% by 2027. This will result in a tax saving of up to $268 in 2027-28 and up to $536 in 2028-29 for taxpayers within this bracket.
Proposed Personal Income Tax Rates (excluding Medicare levy)
| Thresholds ($) | Rates in 2024-25 and 2025-26 (%) | Rates in 2026-27 (%) | Rates in 2027-28 (%) |
| $0 – $18,200 | Tax-free | Tax-free | Tax-free |
| $18,201 – $45,000 | 16% | 15% | 14% |
| $45,001 – $135,000 | 30% | 30% | 30% |
| $135,001 – $190,000 | 37% | 37% | 37% |
| > $190,000 | 45% | 45% | 45% |
- Energy Bill Relief
The Government has allocated $1.8 billion to extend the $150 energy bill relief for households and small businesses. This rebate will be provided in quarterly installments from July 2025 through December 2025. - Healthcare Investments
$8.5 billion will be dedicated to expanding Medicare, including 50 new urgent care clinics and bulk-billed GP services. The Government will also invest $1.8 billion in subsidising medicines through the Pharmaceutical Benefits Scheme. - Medicare Levy Thresholds
From July 2024, the Government will increase the Medicare levy low-income thresholds to provide further relief for low-income earners, ensuring they remain exempt from the levy or pay a reduced rate. The thresholds for the 2025 income year will be as follows:
Medicare Levy Low-Income Thresholds
| Category of Taxpayer | 2024 Threshold ($) | 2025 Threshold ($) |
| Single individual | $26,000 | $27,222 |
| Families not eligible for the SAPTO | $43,846 | $45,907 |
| Single individual eligible for the SAPTO | $41,089 | $43,020 |
| Families eligible for the SAPTO | $57,198 | $59,886 |
The threshold changes will cost $648 million over five years.
- Housing and Home Ownership
The ‘Help to Buy’ program will provide an equity contribution of up to 40% to assist eligible homebuyers in purchasing homes with a lower deposit. The program’s income eligibility thresholds have been increased to $100,000 for individuals and $160,000 for joint applicants.
Proposed Help to Buy Income Thresholds
| Category | Previous Threshold ($) | New Threshold ($) |
| Single applicant | $90,000 | $100,000 |
| Joint applicants | $120,000 | $160,000 |
- Business Measures
Non-compete clauses for low- and middle-income employees will be banned starting in 2027. This will foster greater workforce mobility. Additionally, the Government is freezing the excise on beer for two years, from August 2025, benefiting brewers and consumers. - Tax Compliance and ATO Funding
Almost $1 billion has been allocated to expand the Australian Taxation Office’s compliance programs, focusing on areas like the shadow economy, tax avoidance, and ensuring timely tax payments from medium and large businesses. - Foreign Ownership Restrictions
The Government has implemented a two-year ban on foreign purchases of established dwellings starting in April 2025, with some exceptions. - Student Loan Relief
A 20% reduction will be applied to all outstanding Higher Education Loan Program (HELP) and other student debts. Additionally, the income threshold for repayments will increase to $67,000 in 2026. - Deficit and Debt
The Budget will run a deficit of $42.1 billion in 2025-26, with government debt projected to rise to 21.5% of GDP. Economic growth is forecasted at 2.25% for 2025-26. - Tax Practitioner Regulation
The Government will modernise the registration framework for tax practitioners and provide additional funding to enhance compliance targeting high-risk tax practitioners, ensuring better protection against tax agent misconduct. - Strengthened Tax Integrity
The ATO will receive an additional $999 million to extend key tax compliance programs, focusing on shadow economy behavior, medium and large businesses, and multinational companies. - Foreign Resident Capital Gains Tax (CGT)
The start date for the changes to the foreign resident CGT regime has been deferred to October 2025, affecting the types of assets subject to CGT and requiring pre-transaction disclosures for certain transactions. - National Anti-Scam Centre
A $6.7 million extension will enhance the operation of the National Anti-Scam Centre to protect consumers and businesses from scams. - Small Business Support
$12 million will be allocated to protect small businesses, improve regulatory oversight, and support initiatives to combat illegal phoenixing activities and unfair trading practices.
Implications for Your Business
The extended ‘Help to Buy’ scheme, alongside reforms targeting non-compete clauses and foreign ownership restrictions, will present opportunities for businesses in housing, real estate, and related industries. Businesses should also be aware of the Government’s enhanced tax compliance measures, which may affect how they handle tax obligations and reporting.
How Walker Hill Accounting Can Assist
Our team is available to guide you through these changes, helping you capitalise on available opportunities, manage potential tax impacts, and ensure compliance with the new regulations. Whether you’re looking to optimise your business strategy or navigate the changes in tax law, we are here to provide expert support. Contact us at support@walkerhill.com.au
