Federal Budget 2025-26

Approaching an election, the 2025-26 provided little in way of substantive tax announcements. This of course is Labours bid for re-election. We will see the alternatives later this week when the opposition has its turn. As a result, none of the below should be considered a sure thing!

Our summary is as follows:

The highlights:

• Tax Cuts – from 1 July 2026, the tax rate on income earned between $18,201 and $45,000 will be reduced by 1% to 15%, and then will reduce by a further 1% from 1 July 2027. Savings to each taxpayer earning over $45,000 of $268 in 2026 financial year and $536 within the 2027 financial year. If you earn between $18,201 and $45,000, your tax saving will be proportionate only.
• Medicare Levy – the low-income threshold will be increased from 1 July 2024. The medicare levy is 2% and therefore you will find you are paying less than 2% if your income is less than $27,222 for singles, and $45,907 for families.
• Instant Asset Write-off for small businesses – The previous budget announcement that extended the instant asset write-off from $1,000 to $20,000 to 30 June 2025 is still before parliament and has not been legislated. This would mean, assets purchased by small businesses post 30 June 2025 will need to be depreciated, not claimed instantly, if the cost exceeds $1000.
• Student Debt – if you currently have a HELP debt the balance outstanding will be reduced by 20% at 1 June 2025 before annual indexation is applied. The Government will also increase the amount that people can earn before they are required to start paying back their loans, $54,435 in 2024–25 to $67,000 in 2025–26.

Other budget announcements:

• Energy Rebates – $150 rebates on electricity bills. The rebates will be automatically applied to every household and small businesses from 1 July

• Non-compete clauses – there will be a ban on non-compete clauses for workers earning less than $175,000 per year, meaning they will be free to move to a competing business or start their own. This measure aims to close all loopholes in competition law that block staff from being hired by competitors

• Wage increases for Aged care & Child care workers
• New key apprenticeship program – 1 July 2025, eligible apprentices in housing construction occupations will receive up to $10,000 in financial incentives over the course of their apprenticeships. In addition – Employers of apprentices in priority occupations may also be eligible for up to $5,000 as a Priority Hiring Incentive

If you have any questions or would like more information regarding the proposed tax changes announced in the 2025 – 2026 Budget, please do not hesitate to contact us.

– James Davis

Posted 26.03.2025

This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.