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 in Australia 2025
Low-income earners who are bringing in between $18,201 and $45,000 will see a reduction in the personal income tax rate from 16% to 15% starting 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 from $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 2025
Those of us in the accounting world pricked our ears when we read that there will be $1 billion of funding for the Australian Taxation Office (ATO) to expand its tax compliance programs. Stay tuned for what the implications will be.
This will include greater scrutiny on business structures, tax reporting, and BAS lodgement. Small business owners should prepare for increased audit activity, especially those with complex deductions or high cash flow variance.
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, disincentives for workers to leave current roles, and a barrier to entry for new businesses to enter the industry.
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.
Small Business Support in the 2025 Federal Budget
In summary, small businesses are a major focus in the 2025–26 Federal Budget, with targeted initiatives designed to ease cost pressures, encourage energy-efficient upgrades, and improve cash flow management. If you’re running a small business, here’s what you need to know:
| Measure | Details |
| Energy Bill Relief | Up to $150 rebate for ~1 million SMEs until the end of 2025, totaling $800 in support since 2022 |
| Energy Efficiency Grants | Grants of up to $25,000 to manage usage and improve energy efficiency |
| Buy Australian Campaign | $20 million national campaign in 2025–26 to encourage buying local products/services |
| Mental Health & Financial Wellbeing | Continued support for NewAccess for Small Business Owners and the Small Business Debt Helpline |
| Disaster Relief Co-Funding | $693.2 million in co-funding to support disaster-impacted small businesses and NFPs |
| Unfair Trading Protections | Expansion of Unfair Trading Practices and Unfair Contract Terms protections |
| Instant Asset Write-Off Extension | $290M extension of the $20,000 write-off for turnover <$10M businesses until June 2026 |
| Apprenticeship Housing Incentive | Doubling the incentive to $10,000 for eligible construction apprentices |
| Construction Contractor Payment Times | 20-day payment terms for major Government Business Enterprise projects |
| Draught Beer Excise Support | Increased support via excise remission scheme & Wine Equalisation Tax rebate |
| Fresh Produce Supplier Protection | $2.9 million to improve enforcement under the Food and Grocery Code |
| Franchising Code Enforcement | $7.1 million for the ACCC to enhance transparency and regulatory oversight |
| First Nations Businesswomen Mentoring | $3.4 million over three years for a coaching and mentoring program |
Source: The Federal Budget 2025-2026 – update for small business
$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 we thought it worth noting that the extension of this has not yet 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 affect your individual circumstances, you know where to find us!
Contact information:
Name: Future Advisory
Email: [email protected]
Phone: 1300 225 888
Google Maps: https://www.google.com/maps?cid=6437415810719387516
FAQ
How does the 2025 Federal Budget support small businesses in Australia?
The 2025–26 Federal Budget includes key initiatives like energy rebates, extended asset write-offs, disaster relief funding, and workforce incentives to help small businesses manage costs and grow sustainably. You can speak with our accountants in Melbourne CBD or Narre Warren to understand how these changes affect your business.
Am I eligible for the $150 energy rebate for small businesses?
If you operate a small business with an active electricity account, you may qualify for the rebate. Eligibility details are available through state portals, or you can reach out to our Cremorne accountants to check your status.
What is the current instant asset write-off threshold for 2025?
The asset write-off threshold has been extended to $20,000 for small businesses with turnover under $10 million until 30 June 2025. After that, it may be reduced to $1,000. For advice tailored to your cash flow or equipment planning, our small business bookkeeping service can assist.
How can a VCFO help my business make the most of the budget?
A Virtual CFO (VCFO) provides strategic guidance, forecasting, and budget management to ensure your business takes full advantage of grants and incentives from the budget.
What grants or incentives apply to trades or apprenticeships?
Eligible employers can access up to $10,000 for hiring construction apprentices. We recommend speaking with our financial planning experts to align staffing strategies with your long-term goals.
Do you offer Xero bookkeeping and advisory services?
Yes, we’re certified Xero accountants, offering end-to-end bookkeeping, reporting, and system integrations to help small businesses stay tax-compliant and financially efficient.
Can Future Advisory help with financial planning for business owners?
Absolutely. Our financial planning team helps business owners navigate tax, investments, superannuation, and retirement strategies — especially in light of budget and policy changes.
Do you offer mortgage broking services for small business owners?
Yes! Our mortgage broker services help business owners and investors secure finance for property, business loans, or refinancing, all aligned with your cash flow needs.
