What You Need to Know -
Federal Budget 2025-26
Last night, the Australian Government delivered the 2025-26 Federal Budget, with a clear focus on cost-of-living relief, housing, healthcare, and economic resilience.
With an election on the horizon, the budget aims to balance short-term financial support with long-term investment in infrastructure, education, and defence. Despite a $27.6 billion deficit forecast for 2024-25 and a further $42.1 billion deficit for 2025-26, inflation is falling faster than expected, forecasted to be 2.5% in 2025-26, reinforcing economic stability.
Key budget highlights:
- Tax Cuts: From July 1, 2026, the tax rate for incomes between $18,201 - $45,000 will drop from 16% to 15%, then further to 14% from 1 July 2027.
- Energy Bill Relief: Energy bill relief has been extended by six months to the end of 2025 with households and eligible businesses to receive two additional quarterly $75 rebates.
- Pharmaceutical Benefits: $1.8bn has been allocated to list new medicines on the Pharmaceutical Benefits Scheme (PBS), and the maximum price for PBS-listed medicines will be capped at $25 from 2026.
- Medicare & Healthcare Boost: $8.5 billion will expand bulk billing, aiming for 90% of GP visits to be free by 2030. 50 new Medicare Urgent Care Clinics will also be built.
- Childcare & Education Investment: $427 million will guarantee three days of subsidised childcare for all families earning up to $530,000. A further $1 billion will go towards building more childcare centres, particularly near schools.
- HECS/HELP Debt Reduction: University graduates will have 20% wiped off their student loans, saving the average graduate $5520. The repayment threshold will also increase to $67,000 in 2025-26.
- ‘Buy Australian’ Campaign: $20m in funding towards the government’s ‘Buy Australian’ campaign to support national produce.
- National Food Security Strategy: The government announced $3.5m towards enhancing resilience in the country’s national food supply chains.
- Defence & Security: An additional $10.6 billion over four years to strengthen Australia’s military and boost regional security.
- Completing the NBN: A further $3 billion to complete the rollout of the NBN to provide faster access to more premises of which 54% is in regional Australia.
- Housing & Construction Support: More incentives for tradies & apprentices, including $10,000 payments for construction apprentices and $5,000 priority hiring incentives for employers.
- Non-compete clauses: From 2027, these clauses will be banned for anybody earning less than $175,000 a year.
- Foreign CGT measures: The start date of the 2024–25 Budget measure to strengthen the foreign resident Capital Gains Tax regime will be deferred from 1 July 2025 to the later of 1 October 2025 or the first 1 January, 1 April, 1 July or 1 October after assent.
What we didn’t see
- Small Businesses: No extension for the $20,000 instant asset write-off which is set to end after 30 June 2025.
- Sheep Farmers: The government is proceeding with plans to end live sheep exports by 2028, despite widespread opposition from the agriculture industry.
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