Following the recent federal election, the Labor Party has returned to government with a clear majority in the House of Representatives. This outcome sets the stage for a renewed focus on delivering the commitments made during the election campaign, as well as addressing the unfinished business left from the previous term. 

In this article, we provide a detailed view of the key policies relevant to individuals, small businesses, and the broader economy, to help you understand how these changes might impact your finances and planning.

Individuals

• Personal Income Tax Cuts: The 2025–26 federal budget outlined modest but meaningful income tax cuts scheduled to take effect from 1 July 2026 and again from 1 July 2027. 
• The tax rate applicable to the $18,201 to $45,000 income bracket will decrease from 16% to 15% from 1 July 2026, followed by a further reduction to 14% from 1 July 2027. This adjustment will provide a modest tax saving for taxpayers within this bracket, with a maximum reduction of $268 in the 2026–27 financial year and increasing to $536 in the 2027–28 year. 
• The legislative measures enabling these cuts were passed through Parliament on 26 March 2025.

$1,000 Instant Work-Related Expenses Tax Deduction:

• In an effort to simplify tax returns and reduce administrative burdens, the Government has proposed a $1,000 instant deduction for work-related expenses. This simplified claim is available exclusively to taxpayers who earn labour income, including wages and salaries. It is slated to commence from the 2026-2027 income year.
• It is important to note that this concession is not available to those who earn only business or investment income. Taxpayers who anticipate that their work-related expense claims will exceed $1,000 still have the option to claim the full amount by maintaining traditional records and substantiation. 
• The introduction of this instant deduction aims to reduce the complexity of lodging tax returns and encourage compliance, while still allowing taxpayers to claim other non-work-related deductions as per usual.

Energy Rebate Extended

The federal budget also confirmed the extension of the energy rebate initiative, which provides much-needed relief to households and small businesses facing rising energy costs. 

Starting 1 July 2025, eligible recipients will receive a further $150 energy rebate until the end of the 2025 calendar year. These rebates will be automatically credited in quarterly instalments directly on electricity bills, providing a simple and effective means of support. 

Cheaper Home Batteries:

In addition to direct rebates, the Government has committed to a new initiative aimed at lowering the cost of home battery installations from 1 July 2025. Under this scheme, households will be able to purchase a typical home battery at a 30% discount on installation costs, potentially saving around $4,000 per battery. 

5% Deposit Scheme for First Home Buyers

Addressing housing affordability remains a key priority for the Government, which has expanded its support for first home buyers through the introduction of a 5% deposit scheme. This scheme will enable eligible Australian first home buyers to purchase property with just a 5% deposit without the need to pay for Lenders Mortgage Insurance (LMI), a significant barrier for many first-time homeowners.

Eligible participants must be Australian citizens or permanent residents who have either never owned property or land in Australia, or have not owned any property or land for at least ten years. The scheme is available to owner-occupiers only, further supporting Australians seeking to enter the property market for the first time.

Superannuation

A notable legislative development concerns the proposed Division 296 tax on superannuation balances above $3 million. This reform was initially scheduled to take effect from 1 July 2025 but the legislation enabling this tax lapsed when Parliament dissolved ahead of the election. The Government now faces the decision of whether to reintroduce the proposal to the Senate, potentially requiring support from the Greens to pass.

Senator Nick McKim of the Greens has indicated support for the tax but with conditions, including lowering the threshold to $2 million and indexing it to inflation. Additionally, the Senator has linked his support to the imposition of a prohibition on superannuation funds borrowing to finance their investments. 

If enacted, the Division 296 tax would increase the headline tax rate on earnings for total superannuation balances exceeding $3 million to 30%. This tax calculation includes growth in the superannuation balance over the financial year, accounting for contributions and withdrawals. Both realised and unrealised gains would be captured, and negative earnings could be carried forward to offset future years’ gains, providing some smoothing for fund members.

Small Business

Extending the Instant Asset Write-Off:

For small business owners, the instant asset write-off remains a key incentive for capital investment. This measure allows small businesses to immediately deduct the cost of eligible assets rather than depreciating them over several years. 

The threshold for this deduction was raised to $20,000 for the 2024–25 financial year and the legislation supporting this increase was passed by Parliament on 26 March 2025. 

The Government has now committed to extending this $20,000 threshold until 30 June 2026, providing businesses with greater certainty and encouragement to invest in plant, equipment, and other capital assets.

National Small Business Strategy:

The Government has released its draft National Small Business Strategy for consultation. This strategy aims to streamline interactions between small businesses and various government jurisdictions, reducing regulatory friction and simplifying compliance requirements. 

By enhancing cooperation between federal, state, and local government bodies, the strategy seeks to improve the overall business environment for small enterprises, helping them to grow and thrive.

Energy

Green Aluminium Production Credit:

In a significant move to support the transition to renewable energy, the Government has allocated $2 billion for a new Green Aluminium Production Credit. This fund will assist Australian aluminium smelters in switching their energy consumption to renewable electricity sources by 2036. Australia has four aluminium smelters, with Tomago Aluminium near Newcastle, NSW, being the largest single electricity user in the country.

Aluminium is the second most utilised metal worldwide and is highly energy intensive. The Institute of Energy Economics and Financial Analysis estimates that aluminium production accounts for about 10% of Australia’s electricity demand. 

The initiative allows smelters to negotiate emissions-linked credit contracts, which will provide financial incentives based on the amount of green aluminium produced. These contracts will last for up to 10 years, with final credit rates varying according to the specific circumstances of each facility. The credits are linked to reductions in Scope 2 emissions—the indirect greenhouse gas emissions from purchased electricity, steam, heat, or cooling. 

Since these emissions account for approximately 85% of aluminium smelting emissions, the policy targets the largest component of the industry’s carbon footprint. This approach aims not only to reduce energy consumption from fossil fuels but also to reshape the value chain within the aluminium sector toward sustainability.