Summary
Last night, the Treasurer, Jim Chalmers, released the Government’s 2025-26 Budget. The Treasurer identified five main Budget priorities:
- Helping with the cost of living
- Strengthening Medicare
- Building more homes
- Investing in every stage of education
- Making our economy stronger, more productive and more resilient.
Also, keep in mind that the announcements made in the Budget remain proposals at this stage. All of the proposals mentioned must be passed by Parliament before they become law.
Cost of Living
Energy bill relief extended for six months
- All Australian households and eligible small businesses will receive an additional energy rebate of $150
- The rebate will be automatically applied to electricity bills between 1 July and 31 December 2025 in two quarterly instalments
- It’s expected that the eligibility rules that apply to small businesses will remain unchanged.
Student loans to be cut by 20%
- Student loans will be reduced by 20% before the annual indexation is applied on 1 June 2025.
- The changes apply to all HELP Student Loans, VET Student Loans, Australian Apprenticeship Support Loans, Student Start up Loans and Student Financial Supplement Scheme
Reduced student loan repayments
- The income that can be earned before student loan repayments need to be made will be increased from $54,435 in 24/25 to $67,000 in 25/26.
- Repayments will be calculated on just the income earned above the $67,000 threshold, not on total income.
Lower cap for PBS medicines
- The maximum cost of Pharmaceutical Benefits Scheme (PBS) medicines will decrease from $31.60 to $25 per script from 1 January 2026.
- Pensioners and Commonwealth concessional cardholders will still only pay the subsidized rate of $7.70 per PBS script until 1 January 2030
Medicare bulk billing incentives
- Incentive payments will be introduced to expand bulk billing to all Australians from 1 November 2025.
- A new Bulk Billing Practice Incentive Program will be introduced for general practices if they bulk bill every visit under Medicare.
- Nine out of 10 GP visits are expected to be bulk billed by 2030.
Tax
Reduction in the lowest marginal tax rate for individuals
The lowest marginal tax rate (16% on taxable income between $18,201 and $45,000) will be reduced over two financial years to;
- 15% from 1 July 2026
- 14% from 1 July 2027
There will be no changes to other marginal tax rates and thresholds. The table below summarizes thresholds;
| Thresholds | Rates in 2024/25 & 2025/26 | Rates in 2026/27 | Rates in 2027/28 |
| $0-$18,200 | Tax free | Tax free | Tax free |
| $18,201 – $45,000 | 16% | 15% | 14% |
| $45,001 – $135,000 | 30% | 30% | 30% |
| $135,001 – $190,000 | 37% | 37% | 37% |
| > $190,001 | 45% | 45% | 45% |
Increasing the Medicare Levy low income threshold
The Medicare Levy low-income thresholds that apply to those who are exempt from paying the Medicare Levy will increase in 2024-25, as follows;
| Status | 2023-24 | 2024-25 |
| Single | $26,000 | $27,222 |
| Single eligible for SAPTO | $41,089 | $43,020 |
| Family | $43,843 | $45,907 |
| Family eligible for SAPTO | $57,198 | $59,886 |
| Additional threshold for each dependant child | $4,027 | $4,216 |
Social Security
No mention of further freezing of deeming rates
Deeming rates have been frozen since 1 July 2022 and were intended to be applicable for two years until 30 June 2024. This was extended for another year in last year’s Federal Budget with historically low deeming rates continuing to be frozen until 30 June 2025.
While the Budget is silent on the issue of deeming, recent media reports indicate the Government will seek to hold deeming rates at their current levels beyond 1 July 2025. Current deeming rates are;
| Threshold | Lower deeming rate | Upper deeming rate | |
| Single | $62,600 | 0.25% | 2.25% |
| Couple | $103,800 | 0.25% | 2.25% |
Other Measures
There were a number of other measures, or updates to previous announcements & legislative updates. Should you wish to discuss or need further information, please contact our office. They included;
- 3 day guarantee for child care subsidy
- Implementation of aged care reforms
- Funding pay increases for aged care workers
- Regulations to allow individuals to exit legacy pensions
- Indexation of the general transfer balance cap to $2 million
- Increase in Superannuation Guarantee rate
- Additional funding to support timely payment of Super Guarantee payments
Where to from here?
Many of the measures announced in the 2025 Federal Budget need to be passed as law to take effect. With the 2025 Federal Election expected to be called shortly, there are limited days for both houses of Parliament to sit to pass these measures.
If you have any questions, please contact our office to help you understand how these proposed changes may apply to your situation.
