Key Highlights from the 2025-26 Federal Budget

The 2025-26 Federal Budget brings several significant changes to tax rates, the Medicare Levy threshold, and introduces various measures in non-tax related areas.

Tax Rate Changes
From 1 July 2026, the government will implement tax cuts for individual taxpayers. Specifically, the current 16% tax rate will decrease to 15%, and in the 2027 financial year it will drop further to 14%. This reduction will primarily affect those earning between $18,201 and $45,000, with up to $536 in savings from 2028.

Medicare Levy Threshold Changes
The budget includes an increase in the Medicare levy low-income threshold, allowing more individuals to be exempt from paying the levy. For example, the threshold for single individuals increases to $27,222, up from $26,000 in 2024. This change is aimed at providing cost-of-living relief.

Non-Tax Related Measures
Beyond taxes, the government has introduced various measures including a 20% reduction in student loan debt, (subject to the passage of legislation), expanded energy bill relief, and an increased income cap for first homebuyers under the Help to Buy scheme. Additionally, there will be restrictions on foreign ownership of housing, with new rules targeting land banking and the purchase of established dwellings.

These changes aim to alleviate financial pressures and stimulate economic growth across various sectors.

If you’d like to delve deeper into the changes that have been announced, the National Tax & Accountants' Association (NTAA) have included further information in their 2025/26 Federal Budget Summary, which you can access here.

If you have any questions in relation to these changes and would like to discuss, please do not hesitate to contact our office.