The 2025 Federal Budget Recap

Wake up, it’s Federal Budget time! Perhaps our highlight of this year’s budget announcement – which was handed down by Treasurer Jim Chalmers yesterday – is from the annual ABC Winners and Losers piece that names an unexpected fiscal winner: Giant Pandas. Congrats to Xing Qiu and Yi Lan, who are about to be millionaires 😉 

So what’s in store for us humans? Tax cuts! Cost of living issues addressed, women’s health, childcare and aged care workers will receive further support. Education and Medicare are two more areas of note this year. Let’s get stuck into it.

Tax Cuts

Low income earners who are bringing in between $18,201 and $45,000 will see a tax cut from 16% to 15% as of July 1 2026. This will decrease again to 14% from July 1 2027. This tax cut will primarily benefit students, older part-time workers and women – particularly single parents – who will find an additional $268 in their pocket next year, with $536 to follow the year after.

Medicare Levy Threshold Reduction

Another win for low income earners: the Medicare levy threshold will increase from $26,000 to $27,222 for single people and $43,846 to $45,907 for families. Pensioners, seniors and families with additional children will all see increases in the threshold too.

ATO Tax Compliance

Those of us in the accounting world pricked our ears when we read that there will be $1 billion of funding for the ATO to expand its compliance programs. Stay tuned for what the implications will be.

Cost of Living

Extended energy bill relief

Every household and around one million small businesses will continue to benefit from the rebates put in place by the government earlier this year with two $75 rebates being applied directly to their energy bill. 

Rental support and housing initiatives

The Commonwealth Rent Assistance program will be boosted by a further 10%, providing desperately needed housing support to low income earners. There are also plans to invest in more housing developments as the government seeks to increase supply and decrease demand, easing the housing crisis for all.

Help to buy program extended

The initiative that intends to make home ownership more achievable by reducing the upfront cost (that is, the government contributes up to 40% of the property price for new homes and 30% for existing homes in exchange for equity in the home) is set to be extended, with thresholds increased.

Student debt slashed by 20%

All existing HECS debts will see a 20% reduction on their balance – effective June 1 2025. This will see less money leaving the paychecks of those with a HECS debt and is intended to encourage further study for those who may have wanted to but couldn’t afford or justify the expense. The repayment schedule will also see changes to reduce the required payment amounts from July 1 2025.

Child care

This one’s already been passed and will be happening from Jan 2026: three days of subsidised child care will be available to all families earning less than $533,000. The current ‘activity test’ will be scrapped which means that parents can access the rebate without meeting the existing 16 hours of work per fortnight or study criteria.

Furthermore, the government is investing $1 billion to provide grants to early education providers intended to expand existing and build new centres. 

Healthcare

Medicare and healthcare access

A record $7.9 million has been pledged towards bolstering bulk billing to address the current GP cost and access crisis. In addition, funding has been allocated towards opening more Urgent Care Clinics, to support public hospitals and initiatives to expand the workforce. Collectively this will mean lower costs and more access for all Australians.

Women’s health

More medications needed for contraception, the treatment of endometriosis and IVF will be listed on the PBS. Medicare rebates for long term contraceptive measures such as IUDs will be increased significantly, as will the rebate for IUD insertion and removal. 

For the one in seven women who suffer from endometriosis, the $20.9 million allocated to the expansion of endo and pelvic pain clinics will be very welcome.

The PBS

In news that will affect millions of Australians, the price of PBS listed medications will be cut from $31.60 to $25 from January 2026. 

Aged Care Workers

A further $88.3 million has been budgeted towards wage increases for the industry, boosting the minimum wage across the board for all aged care workers. $292 million is allocated to continue implementing the recommendations from the royal commission.

Non-compete clauses to be banned

In niche but noteworthy news for business owners, non-compete clauses will be banned altogether for low and middle income earners. The government aims to address the issues that these clauses present: hindered competition among businesses, disincentive for workers to leave current roles and a barrier to entry for new businesses to enter the industry.

$20k instant asset write off

We know how many of our clients make use of the existing $20,000 instant asset write off scheme so thought worth noting that the extension of this has not yes been passed in parliament – enjoying this tax perk may be a thing of the past. Stay tuned!

For every bit of detail from the 25/26 Federal Budget, head over to the official website. If you’ve got questions as to how this will effect your individual circumstances, you know where to find us!