The Federal Budget 2025-26
The 2025-26 Federal Budget has been released, and we have compiled all of the key information passed down by Treasurer, Jim Chalmers. The budget aims to provide cost-of-living relief while addressing economic challenges and supporting growth.
The Budget forecasts a deficit of $27.6 billion in 2024-25, increasing to $42.1 billion in 2025-26. The larger deficit is driven by the Government’s cost-of-living relief measures and necessary spending on health and frontline services. From tax reforms to energy rebates, explore what’s relevant to you.
Business Owners
Key Highlights of the Budget
$150 Energy Bill Relief for Small Businesses – Extended to End of 2025
The Government is extending its energy bill relief program, providing a $150 rebate to eligible small businesses. This rebate will be automatically applied as a quarterly credit to energy bills, offering continued support through the end of 2025.
Support for the Hospitality Sector and Alcohol Producers
The Government is pausing indexation on draught beer excise and excise equivalent Support for Hospitality and Alcohol Producers: Pausing indexation on draught beer excise and customs duty rates, with continued support under existing schemes, estimated to decrease receipts by $165 million over five years.
Ensuring Fair Competition
The Government will work with states and territories to extend Unfair Trading Practices protections to small businesses.
$7.1 million over two years to strengthen the ACCC’s enforcement of the Franchising Code.
Protections from Unfair Contract Terms and Unfair Trading Practices will be extended to businesses regulated by the Franchising Code, subject to consultation.
Digital and Cyber Security Support
Over $60 million committed since the 2023-24 Budget to help small businesses enhance their digital and cyber security capabilities through:
Digital Solutions program
Cyber Wardens program
Small Business Cyber Resilience Service
Cyber Health Check
Supporting Australian Businesses
$20 million for the Buy Australian Campaign to encourage consumers to buy Australian-made products.
Exceeded SME procurement target of 35% of contracts by value from SMEs for contracts up to $20 million.
Applying the Environmentally Sustainable Procurement Policy to an additional $4.5 billion of public procurement.
$16 million for a new Australia–India Trade and Investment Accelerator Fund.
Providing a Lifeline to Affected Communities
Continued support for communities impacted by Ex Tropical Cyclone Alfred, including:
Disaster Recovery Allowance and Australian Government Disaster Recovery Payment
$30 million for council clean-up activities
$10,000 Business Continuity Payments for Child Care Subsidy approved services closed or partially closed for 8 days or more
Total national disaster support costs expected to rise to at least $13.5 billion.
$1.2 billion provisioned in the Contingency Reserve for future disaster response and recovery.
Individuals and families
Key Highlights of the Budget
Additional Tax Cuts Confirmed Starting from 1 July 2026
This is a key element of the Budget. Additional tax cuts will be rolled out over two years, starting from 1 July 2026, to further reduce the tax burden on Australian taxpayers.
From 1 July 2026: The 16% tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15%.
From 1 July 2027: This tax rate will be further reduced to 14%.
The personal income tax rates (excluding the Medicare levy) for the 2025 and 2026 income years are set out in the following table, along with the proposed changes to the tax rates for the 2027 and 2028 income years:
Australian resident individual income tax rates:
· By way of example, a taxpayer earning between $18,201 and $45,000 will get a tax cut of up to $268 in the 2027 income year and up to $536 from the 2028 income year.
The Medicare levy low-income thresholds for single individuals and families for the 2025 income year, together with the comparative thresholds for the 2024 income year, will be as follows:
For each dependent child or student, the family income thresholds will increase by a further $4,216 (up from $4,027).
$150 Electricity rebate to all Australian households.
The rebate will be applied as an automatic quarterly credit to energy bills, continuing through to 31 December 2025.This is in addition to the $300 going to households in energy bill relief in 2024–25; and is on top of other state rebates
Making it cheaper and easier to see a doctor
In this Budget, the Government is making a record investment of $7.9 billion to provide more bulk billing so people can see a general practitioner (GP) for free. This is the largest single investment in Medicare since its creation over 40 years ago.
The Government is expanding bulk billing incentive eligibility to cover all Australians from 1 November 2025
Cutting the Cost of Medicines – from 1 January 2026
Lower Co-Payments: Maximum cost of medicines on the PBS reduced from $31.60 to $25.00 per script for everyone with a Medicare card and no concession card. Pensioners' co-payment remains frozen at $7.70.
Cheaper Medicines: Four out of five PBS medicines will become cheaper for general non-Safety Net patients, with larger savings for 60-day prescriptions.
Investment in New Medicines: $1.8 billion invested to list new medicines on the PBS, including treatments for endometriosis, lymphoma, menopause, and treatment-resistant major depression. Since 1 July 2022, 319 new or amended PBS listings have been approved.
Child care subsidy
3-day guarantee to replace activity test from January 2026
Cutting Student Debt – from 1 July 2025
The Government announced it will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20%, subject to the passage of legislation. This will remove $16 billion from the student loan accounts of 3 million Australians.
Key Changes:
Debt Reduction: A 20% reduction in all outstanding HELP and other student debts.
Fairer Indexation: Recent reforms to make indexation arrangements fairer, limiting future indexation and retrospectively reducing the indexation applied in 2023 and 2024, which has already decreased student loan debt by $3 billion.
Repayment System Reform: From 1 July 2025, the income threshold for loan repayments will increase from $54,435 in 2024-25 to $67,000 in 2025-26. Compulsory repayments will be lower for people earning under around $180,000 and above the current minimum threshold.
These changes will deliver immediate cost of living relief for millions of Australians with student loan debts.
Apprentices and fee-free TAFE subsidies extended
The New Energy Apprenticeships Program will be reframed as the Key Apprenticeship Program and expanded to capture critical residential construction occupations
A Better Deal for Consumers
ACCC Funding: $38.8 million to crack down on misleading pricing practices and unconscionable conduct in the supermarket and retail sector.
Support for Fresh Produce Suppliers: $2.9 million to enforce rights under the Food and Grocery Code of Conduct, with mandatory code and penalties for breaches.
New Supermarkets: $240 million for states and territories to liberalise, simplify, and standardise commercial planning and zoning regulations.
Cost Reduction for Essential Products: Reducing costs of 30 essential products in remote First Nations communities to ease cost of living pressures and improve food security.
Tackling Excessive Surcharges, Unfair Practices, and Scams
Card Surcharges: The Government is prepared to ban debit card surcharges, pending further work by the RBA and safeguards to benefit small businesses and consumers.
Unfair Trading Practices: Collaborating with state and territory governments to ban unfair trading practices and empower regulators to enforce consumer guarantees under the Australian Consumer Law.
Anti-Scam Initiatives: $6.7 million in 2025-26 to extend the National Anti Scam Centre's operations, building on over $180 million invested since 2022-23, which has reduced annual scam losses by over $1 billion.
Expanding Help to Buy
The Government is expanding the Help to Buy program to support Australians to buy homes with lower deposits and smaller mortgages. This Budget is committing around $800 million to lift the property price and income caps to make the scheme more accessible.
Under the Help to Buy program, the Government will provide an equity contribution of up to 40 per cent to support eligible home buyers to purchase a home with a lower deposit and a smaller mortgage
