Federal Budget 2025/26 | What it means for you
Treasurer Jim Chalmers delivered the 2025 Federal Budget last night, focusing on cost-of-living relief, healthcare, housing, and economic resilience. But what does this mean for you, your family, and your financial future? Here’s a breakdown of how these changes might impact your day-to-day life and long-term plans.
Personal Income Tax Cuts
The lowest individual marginal tax rate will be reduced over two financial years from the current 16% to 14%.
- From 1 July 2026, the tax rate will drop from 16% to 15%.
- From 1 July 2027, it will reduce further to 14%.
- The reduction in the lowest marginal tax rate means that in 2026-27 individuals may see a tax reduction of $268 and in 2027-28 and future years, a reduction of $536 per year compared to the 2024-25 tax rates. This could help cover rising grocery bills, energy costs, or even contribute to your savings.
Medicare and Healthcare
Getting in to see a doctor and affording medication is becoming a little easier:
- Bulk billing incentives are expanding, so more people can see a GP without out-of-pocket costs.
- If you rely on prescription medication, you’ll save money with the Pharmaceutical Benefits Scheme (PBS) co-payment dropping from $31.60 to $25.00 from 1 January 2026.
- The Medicare levy low-income threshold is increasing, meaning more low-income earners and families will either pay a reduced levy or none at all.
Cost-of-Living Relief
With the cost of living still a major concern, the Budget includes extra support:
- Energy bill relief continues, with eligible households receiving $75 per quarter off their electricity bills until December 2025.
- If you have a HELP (student) loan, you’ll benefit from a 20% reduction in outstanding debt from June 2025, potentially saving thousands of dollars.
- Parents will now receive three days of subsidised childcare per week, regardless of work or study commitments – great news for families juggling finances and work-life balance.
Aged Care
If you or a loved one is receiving aged care support, the government is investing further into the sector:
- More funding for home care packages means more Australians can stay in their homes longer rather than entering residential care.
- The Aged Care Quality and Safety Commission will receive additional support to improve care standards.
- Higher wages for aged care workers should improve staffing levels and care quality.
Superannuation & Retirement
If you’re planning for retirement, there are some key updates to be aware of:
- The Superannuation Guarantee (SG) rate will rise to 12% from 1 July 2025, meaning more money in your super over time.
- The General Transfer Balance Cap (TBC) will increase from $1.9 million to $2 million from 1 July 2025, giving retirees more flexibility in how they structure their retirement income.
Small Business Support
If you own or run a small business, there are some measures designed to make things easier:
- The instant asset write-off extension continues, helping businesses invest in growth.
- Energy bill relief for small businesses remains in place to help with rising costs.
- Faster payment times for contractors and small business suppliers will help with cash flow.
Housing & Foreign Investment
If you’re looking to buy or rent, here’s what’s changing:
- Foreign buyers will be banned from purchasing established homes from April 2025 to March 2027, potentially freeing up more properties for local buyers.
- The ATO is cracking down on land banking, ensuring land is used for housing rather than sitting vacant.
- Additional funding for affordable housing and homelessness services aims to address housing shortages.
Tax Compliance
To ensure tax compliance and protect everyday Australians:
- The ATO’s Tax Avoidance Taskforce has received $717 million to target tax dodgers.
- ASIC will receive $207 million to modernise its business registers.
- A push to improve superannuation guarantee payments will help workers get what they’re owed, on time.
What’s Next?
This Budget is designed to provide cost-of-living relief, improve healthcare, and ensure tax fairness, but there are still questions about how some measures will be implemented. With an election around the corner, further policy changes could be on the horizon.
If you’d like to discuss how these changes impact your financial future, get in touch with our team at Principal Edge. We’re here to help you navigate the opportunities and challenges that come with every Budget announcement.
