The 2025-26 Federal Budget balances voter-friendly relief with strategic investments in healthcare, housing, and compliance. Below, we break down the key measures affecting individuals, businesses, and the broader economy.

Individuals & Families

Two-Stage Personal Income Tax Cuts

• From 1 July 2026:

  • Tax rate for the $18,201–$45,000 bracket drops from 16% to 15%.

  • Maximum annual saving: $268 (2026–27).

• From 1 July 2027:

  • Rate reduces further to 14% for the same bracket.

  • Maximum annual saving: $536 (2027–28).

Medicare Levy Relief for Low-Income Earners

• From 1 July 2024: Thresholds increased to exempt more households.

  • Singles: $27,222 (up from $26,000).

  • Families: $45,907 (up from $43,846).

  • Seniors/Pensioners: $43,020 (singles), $59,886 (families).

Energy Bill Relief

• $150 Credit Quarterly (July–Dec 2025): Automatic rebate for households and small businesses.

• Cost: $1.8 billion over two years.

Housing Support

• ‘Help to Buy’ Program Expanded:

  • Income thresholds raised: $100,000 (singles), $160,000 (couples).

  • Government co-buys up to 30% of existing homes or 40% of new homes.

Business & Employers

Non-Compete Clauses Banned

• From 2027: Prohibited for employees earning under $175,000.

• Aim: Boost competition and mobility for low/middle-income workers.

Beer Tax Freeze & Alcohol Producer Support

• Draught Beer Excise Paused: No tax hikes for 2 years from August 2025.

• Excise Remission Cap Increased: $400,000/year for brewers, distillers, and winemakers (from 1 July 2026).

Trade Tariffs Extended

• 35% Tariffs on Russia/Belarus: Extended as symbolic support for Ukraine.

Government & Compliance

ATO Funding Boost

• $999 Million for Compliance Programs: Targeting tax avoidance, shadow economy, and personal income tax.

• Expected Return: $3.2 billion in recovered revenue.

Contractor Cost Cuts

• $718 Million Saved by 2029: Reduced reliance on external consultants and labour hire.

Economic Outlook

Growth & Debt

• GDP Growth: 2.25% (2025–26), 2.5% (2026–27).

• Deficit: -$42.1 billion in 2025–26.

• Debt: Rises to 23.1% of GDP by 2028–29.

Inflation & Wages

• Inflation: Forecast at 2.5% (June 2025).

• Wage Growth: 3.25% by June 2026.

Global Risks

• Trade Tensions: Tariffs could slow growth, with indirect impacts on Australia’s exports (e.g., mining, agriculture).

Key Takeaways

1. Tax Relief: Modest savings for middle-income earners from 2026.

2. Housing Support: Expanded co-buying scheme eases deposit burdens.

3. Business Shifts: Non-compete bans and beer tax pauses aim to boost competition and local industries.

4. Compliance Crackdown: ATO’s expanded role signals stricter tax oversight.

Important Disclaimer

This information is general and not financial, tax, or legal advice. Consult a professional before making decisions.

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