2025 Federal Budget
The 2025-26 Federal Budget was released on Tuesday, 25 March 2025.
As anticipated, Labor’s fourth Budget primarily targets cost-of-living relief, though it unexpectedly includes proposed tax cuts. Additionally, adjustments to the Medicare levy low-income thresholds were announced.
Beyond these key areas, the Budget also introduces initiatives in Education, Disaster Recovery, Small Business, Infrastructure, and more. Below are the most significant highlights.
Personal Taxation
Personal Income Tax Cuts
From 1 July 2026
The Government has announced it will deliver new tax cuts to all taxpayers from 1 July 2026, by reducing the tax rate
for taxable income between $18,201 and $45,000 as follows:
- From 1 July 2026, the 16 per cent rate will be reduced to 15 per cent.
- From 1 July 2027, the 15 per cent rate will be reduced further to 14 per cent.
This will provide a tax cut of up to $268 in 2026–27 and up to $536 in 2027-28, relative to current tax settings.
If implemented, the new marginal tax rates for individuals would be as follows:
| Thresholds | Rates in 2024-25 & 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% |
For a single person or each member of a couple who is eligible to receive the Low Income Tax Offset(LITO) but not the Senior and Pensioners tax offset, these proposed tax cuts will increase the effective tax-free threshold from $22,575 to $22,867 in 2026-27 and to $23,200 in 2027-28.
Medicare Levy Threshold Increased
From 1 July 2024
The Government will also increase the Medicare levy low-income thresholds by 4.7% for singles, families, and seniors and pensioners from 1 July 2024. This means more than 1 million Australians on lower incomes will continue to be exempt from the Medicare levy or continue to pay a reduced levy rate.
Home Ownership & Renting
Restricting Foreign Ownership of Housing
The Government has announced a range of measures to apply restrictions to the foreign ownership of housing. This
includes banning foreign persons (including temporary residents and foreign‑owned companies) from purchasing
established dwellings for two years from 1 April 2025, unless an exception applies.
Exceptions include investments that significantly increase housing supply or support the availability of housing on a
commercial scale, and purchases by foreign‑owned companies to provide housing for workers in certain circumstances.
Increased Funding for the Help to Buy Program
From 2024-25
The Government will increase funding for the Help to Buy program, by increasing income caps from $90,000 to
$100,000 for singles and from $120,000 to $160,000 for joint applications. In addition, the property price cap will be
increased.
Under the Help to Buy program the Government provides an equity contribution of up to 40% which assists people to
buy homes with lower deposits and smaller mortgages.
Supporting Renters
As part of its commitment to cost-of-living relief, the Government has increased Commonwealth Rent Assistance by 45%, benefiting around one million households. This marks the first back-to-back increase in more than 30 years.
In addition, the A Better Deal for Renters initiative aims to strengthen renters’ rights by introducing consistent rules for evictions and limiting rent increases to once per year.
Cost of Living Measures
Energy Bill Relief Extension
From 1 July 2025
The Government will continue to provide energy bill relief for eligible Australian households and small businesses until
31 December 2025.
The energy bill relief will be $150, paid as $75 each quarter over the remaining two quarters.
This measure extends the energy bill relief measures originally announced in the 2024–25 Budget
Strengthening Medicare
From 2025-26
The Government will provide significant additional funding over five years to increase access to bulk billing and to
expand the Medicare Urgent Care Clinics Program. This will include an additional 50 Medicare Urgent Care Clinics across Australia, which will take the total number to 137
Cheaper Medicines
From 1 January 2026
The Government will provide increased funding to lower the Pharmaceutical Benefits Scheme (PBS) general patient
co‑payment from $31.60 to $25.00 on 1 January 2026.
Concession card holders will continue to pay $7.70 for medicines listed on the PBS
Cutting Student Debt
From 1 June 2025
The Government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by
20 per cent from 1 June 2025.
In addition, from 1 July 2025 the Government will increase the amount that people can earn before they are required to start paying back their loans from $54,435 in 2024–25 to $67,000 in 2025–26.
The Government has stated that no one will pay more under the new system, and compulsory repayments will be lower for people earning under around $180,000 and above the current minimum threshold.