Just as new financial strategies emerge from the government, the 2025–26 Federal Budget, unveiled by Federal Treasurer Dr. Jim Chalmers, presents significant updates that could impact you and your financial decisions. Delivered on 25 March 2025, the Budget is articulated around five core priorities, focusing on crucial aspects such as cost-of-living relief, housing development, and education investments. As you review these changes, pay special attention to the new personal tax cuts, increased Medicare levy thresholds, restrictions on foreign ownership of housing, and proposed reductions in student debts.
One of the standout features of the Budget is the introduction of two new personal tax cuts, which aim to enhance your financial comfort. Starting from 1 July 2026, the marginal tax rate for single taxpayers earning between $18,201 and $45,000 will decrease from 16% to 15%. Furthermore, this rate will further decrease to 14% from 1 July 2027. This progressive easing on your tax obligations could offer you substantial savings over the coming years.
The Budget also addresses healthcare affordability. It proposes an increase in the Medicare levy low-income thresholds for singles, families, and seniors, effective from 1 July 2024. This adjustment aims to ensure that more Australians can access vital healthcare services without financial strain. By raising the threshold, you may find it easier to navigate your healthcare costs.
If you’re carrying a student loan, you can look forward to a significant change as well. Starting on 1 July 2025, student loan debts will be reduced by 20%, coupled with reforms to the repayment system. This is designed to alleviate some of the financial burdens that student debt can impose on fresh graduates and those still in education.
Special attention is given to housing in this Federal Budget, with a ban on foreign individuals purchasing existing homes. This measure could impact the housing market by potentially making more properties available to Australian residents, offering you increased opportunities for home ownership. Additionally, the government plans to delay the enactment of certain tax measures until proper legislation is in place, ensuring that changes are implemented thoughtfully.
Further modifications relate to tax administration and compliance. The Australian Taxation Office (ATO) has been allocated $999 million over four years to extend its tax compliance activities, which may affect the way you engage with tax filings. Additionally, rules surrounding managed investment trusts are set to be amended, ensuring legitimate investors like you maintain access to concessional withholding tax rates starting from 13 March 2025.
Not-for-profits will also see an update, with an updated list of deductible gift recipients, providing you with more options if you choose to support charitable organizations. On the indirect taxes front, you should note that there will be a pause on indexation for draught beer excise, lasting two years from August 2025, as well as increases in excise remission caps for alcohol manufacturers, again effective from 1 July 2026.
To wrap up, the 2025–26 Federal Budget offers a comprehensive snapshot of how government policies could influence your personal finances and everyday life. By being informed and aware of these changes, you can better navigate your financial future in the year ahead.
Please check the following link for our PDF report on the 2025-2026 Budget:
