The 2025-26 Federal Budget was handed down on Tuesday 25 March, brought forward due to the upcoming election. The Government announced a deficit of $27.6 billion this financial year, following two consecutive surpluses. The greatest advantages in this budget relate to healthcare and students.
It is important to note that with the calling of the election for May 3rd, the government is now in ‘caretaker mode’. Therefore, the implementation of these budget proposals will depend on the outcome of the election.
Please see a summary of the significant inclusions below:
Cost of Living
- Energy Bill Relief
- As an extension of existing measures, the Government will pay $150 ($75 each quarter over the remaining two quarters) to eligible Australian households and small businesses until 31 December 2025
- Strengthening Medicare
- Significant additional funding over five years to increase access to bulk billing and expand an additional 50 Medicare Urgent Care Clinics across Australia
- Cheaper Medicines
- Increased funding to lower the Pharmaceutical Benefits Scheme (PBS) general patient co‑payment from $31.60 to $25.00 on 1 January 2026
- Cutting Student Debt
- Reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20 per cent from 1 June 2025
- 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
Personal Taxation
- Further personal income tax cuts
- Deliver new tax cuts to all taxpayers 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
- Deliver new tax cuts to all taxpayers by reducing the tax rate for taxable income between $18,201 and $45,000 as follows:
- Increasing the Medicare levy low-income thresholds
- Increase the Medicare levy low-income thresholds for singles, families, and seniors and pensioners retrospectively from 1 July 2024
- Clarify arrangements for managed investment trusts
- Ensure legitimate investors can continue to access concessional withholding tax rates in Australia, complementing the Australian Taxation Office’s strengthened guidelines to prevent misuse
Small Business
- No initiatives of any significance announced
Social Security
- Strengthening the National Disability Insurance Scheme
- Additional funding over four years from 2025–26 to further safeguard the integrity of the National Disability Insurance Scheme (NDIS), including funding for fraud detection
- Department of Veterans’ Affairs – additional resourcing
- Additional resourcing for the Veterans’ Access Network, Veteran Support Officers, complex case management, information access and mental health support
- Expanding access to early education
- Investing $5 billion, including a new 3 Day Guarantee where every child is eligible for at least 3 days per week of subsidised early education and care, regardless of the family’s level of work or study.
- This replaces the Child Care Subsidy Activity Test.
Aged Care
- Aged care reform and pay increases for aged care nurses
- Additional funding to continue the delivery of aged care reforms and the implementation of recommendations from the Royal Commission into Aged Care Quality and Safety
- Increase the minimum award wages of registered and enrolled nurses employed in the aged care sector
Other
- Restricting Foreign Ownership of Housing
- 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
- Help to Buy program
- The Government will increase funding for the Help to Buy program (assisting people to buy homes with lower deposits and smaller mortgages), by increasing income caps from $90,000 to $100,000 for singles and from $120,000 to $160,000 for joint applications
- The property price cap will also be increased
If you would like individualised information or advice on how these changes may affect you, your family or your business, do not hesitate to contact us.