The 2025 Australian Federal Budget, announced by Treasurer Jim Chalmers on 25 March, outlines the government’s plans for the next financial year. While budget documents can be overwhelming, here’s a simplified look at the key changes that might impact your finances.
Income Tax Changes
The government has introduced new tax cuts to help ease the cost of living. From 1 July 2026, the tax rate for income between $18,201 and $45,000 will drop from 16% to 15%, and then to 14% in July 2027. For someone earning in this bracket, this means an extra $268 in your pocket by 2026 and up to $536 by 2027.
The table below summarises the proposed personal income tax rates and thresholds:
| Taxable Income ($) | 2024–25 & 2025–26 (%) | 2026–27 (%) | 2027–28 (%) |
| 0 – 18,200 | 0 | 0 | 0 |
| 18,201 – 45,000 | 16 | 15 | 14 |
| 45,001 – 135,000 | 30 | 30 | 30 |
| 135,001 – 190,000 | 37 | 37 | 37 |
| 190,001+ | 45 | 45 | 45 |
While these cuts may seem small, they’re part of a broader effort to reduce taxes over time. Additionally, the Medicare levy low-income thresholds are going up by 4.7%, which could benefit lower-income earners.
However, Economist Peter Swan dismissed the tax cuts as a “complete joke,” arguing they won’t offset declining living standards.
Healthcare, Education, and Childcare
Healthcare is getting a boost with increased funding for bulk billing and cheaper medicines under the Pharmaceutical Benefits Scheme (PBS). Starting January 2026, PBS medicine costs will drop to $25 per prescription.
For students, there’s good news: a 20% reduction in outstanding student debts and an increase in the repayment threshold to $67,000 from July 2025. This means you’ll start repaying your loans later and owe less overall.
Childcare is becoming more accessible with the introduction of a “3 Day Guarantee” from January 2026. Most families will qualify for at least three subsidised days of childcare each week—no activity test required.
Energy Relief
The government has extended its energy bill relief program with an additional $1.8 billion commitment. This extension ensures that every household and around one million small businesses will receive rebates to help manage rising energy costs. Specifically, each eligible household and small business will get $150 in rebates, distributed as two payments of $75 each, over the second half of 2025.
Superannuation
The superannuation guarantee rate will increase to 12% from July 2025, helping Australians save more for retirement. Another change is “Payday Super,” which will require employers to pay super at the same time as wages starting July 2026. Super contributions will also apply to Paid Parental Leave for babies born after July 2025.
Also, the Budget reaffirmed its plan to implement a tax on superannuation balances over $3 million.
Housing Affordability
The “Help to Buy” scheme is expanding, allowing eligible buyers to access government equity contributions of up to 40%. A two-year ban on foreign investors buying established homes begins in April 2025, aimed at freeing up housing stock for locals.
Conclusion
The budget introduces measures like tax cuts, cheaper healthcare, student debt relief, childcare subsidies and energy relief designed to ease financial pressure on households. Initiatives around housing and superannuation aim for long-term benefits.
How much these changes affect you depends on your personal situation—whether it’s your income level, family needs, or housing plans. Please feel free to contact us if you would like to have a chat.