The Australian Federal Budget for 2025-26 brought personal income tax cuts to the forefront. Tax reductions will increase to $268 in the 2026-27 financial year and rise to $536 in 2027-28. While these cuts are a major talking point, the Australian Taxation Office (ATO) has been allocated almost $1 billion to boost its compliance efforts, focusing on enhancing enforcement and reducing tax evasion.

Two significant measures from earlier budgets, which have not yet passed through Parliament, are still included in this year’s budget. These include:

• A 30% tax on future earnings of superannuation balances over $3 million.
• A $20,000 instant asset write-off for small businesses in 2024-25.

If these measures do not pass before the next election, they will be scrapped.

This budget is designed to appeal to voters, with more than $7 billion in new spending for 2025-26 and over $20 billion over five years. Most of this funding extends existing programs, with a few notable initiatives:

Energy

• $180 billion to continue the $150 energy bill rebate until the end of 2025.

Healthcare

• $8.5 billion to boost Medicare, fund 50 new urgent care clinics, and introduce a bulk-billed GP service.
• $1.8 billion over five years to reduce the cost of medicines under the Pharmaceutical Benefits Scheme.
• $240 million for women’s health, focusing on reproductive health and menopause.

Education

• $500 million to reduce HECS-HELP debt by 20% for students and adjust repayment schedules starting July 2025.

Housing

• $800 million to expand the ‘Help to Buy’ scheme, which reduces the deposit size needed for home buyers by partnering with the government.

Families

• From January 2026, families with young children will receive three days of subsidized childcare, replacing the previous Child Care Subsidy activity test.

The Australian economy is projected to grow at a modest 2.25% in 2025-26 and 2.5% in 2026-27. However, the government budget will run a deficit of $42.1 billion in 2025-26, with only a slight improvement forecast for the following years.