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March 26, 2025

Federal Budget 2025-26: Key Insights for Individuals and Businesses

The Australian Government has handed down the 2025-26 Federal Budget, packed with measures aimed at easing cost-of-living pressures, stimulating business activity, and reinforcing tax compliance. While headline announcements like personal income tax cuts and energy bill relief make waves, there are also critical updates that could impact individuals, businesses, and investors.

With that in mind, we’ve broken it down to help you more quickly find what you need to know…

Personal Income Tax Cuts: A Modest Adjustment

From 1 July 2026, all taxpayers will benefit from a two-stage tax cut, reducing the tax rate for income between $18,201 and $45,000 from:

• 16% to 15% (2026-27 financial year)

• 15% to 14% (from 2027-28 onwards)

For the average Australian, this translates to a tax saving of up to $268 in 2026-27, increasing to $536 from 2027-28 onwards.

While not as substantial as previous tax reform efforts, these adjustments provide modest relief—particularly for low and middle-income earners—in an economy where wages are expected to grow slowly.

Relief for Low-Income Earners: Medicare Levy Thresholds Increase

From 1 July 2024, the Government is raising the Medicare levy low-income threshold, ensuring that those earning below the threshold are exempt from paying the levy.

Category

2024-25 Threshold

2025-26 Threshold

Singles

$26,000

$27,222

Families

$43,846

$45,907

Single Seniors & Pensioners

$41,089

$43,020

Family Seniors & Pensioners

$57,198

$59,886

Additional child/student

$4,216

$4,027

This change is expected to cost $648 million over five years and will provide tax relief for Australians struggling with cost-of-living increases.

$150 Energy Bill Relief for Households & Small Business

To combat rising utility costs, the Government has extended energy rebates for all households and small businesses:

• $150 will be credited to household energy bills in quarterly instalments from 1 July to 31 December 2025.

• Small businesses will also receive similar relief.

This initiative will cost $1.8 billion over two years and aims to cushion energy price volatility.

Housing Market Changes: Foreign Buyer Ban & Help to Buy Expansion

Two-Year Ban on Foreign Buyers of Established Homes

From 1 April 2025, foreign and temporary residents—as well as foreign-owned companies—will be banned from purchasing existing homes. This measure seeks to prevent "land banking" and free up housing stock for local buyers.

Help to Buy Scheme Expansion

The Government’s Help to Buy scheme allows eligible Australians to co-purchase a home with the Government, reducing the required deposit and mortgage burden.

Key changes:

  • Income eligibility increased from $90,000 to $100,000 for singles and $120,000 to $160,000 for joint applicants.
  • Government will contribute up to 40% of the purchase price for new homes and 30% for existing homes.

However, the program is not yet open for applications, with details still pending. We’ll keep you updated as the scheme opens up.

Business & Employment: New Rules on Non-Compete Clauses

From 2027, non-compete clauses will be banned for employees earning under the Fair Work Act’s high-income threshold (currently $175,000 per year).

Additionally, new laws will prohibit anti-competitive agreements between businesses that:

  • Fix wages or restrict pay increases without worker consent.
  • Prevent staff from moving between competitors (so-called “no-poach” agreements).

These changes reflect broader efforts to increase job mobility, boost wages, and promote fair competition.

Alcohol & Trade Measures: Beer Tax Pause & Russian Tariffs

Beer Excise Tax Frozen for Two Years

The excise tax on draught beer will be paused for two years from August 2025, keeping beer prices stable.

Higher Caps for Alcohol Producers

From 1 July 2026, the excise remission cap for breweries, distilleries, and winemakers will increase from $350,000 to $400,000 per year, providing tax relief to the alcohol industry.

Trade Tariffs on Russia & Belarus Extended

Australia will maintain an additional 35% tariff on Russian and Belarusian imports as a continued sanction measure.

ATO Compliance Crackdown: Almost $1bn in Additional Funding

The Australian Taxation Office (ATO) has received $999 million in funding over four years to expand compliance programs, targeting:

  • Tax avoidance (big business & wealthy individuals).
  • Shadow economy activity (cash businesses & underreporting).
  • Personal income tax compliance.

These programs are expected to recover $3.2 billion in additional tax revenue, meaning increased scrutiny for businesses and high-income earners.

There’s never been a better time to have the Attune team on your side to ensure you remain compliant with all of your tax obligations – business and personal.

Government Cost Cutting: $700m Saved on Consultants

The Government is reducing reliance on external consultants, contractors, and labour hire, aiming to save $718 million by 2028-29.

While this aligns with broader efforts to streamline spending, it may have ripple effects on private sector firms that provide outsourced government services.

Economic Outlook: Growth, Wages & Inflation

Slow Growth Ahead

The Australian economy is expected to grow by 2.25% in 2025-26, rising slightly to 2.5% in 2026-27.

Budget Deficit & Rising Debt

The underlying cash balance is forecast to be in deficit at -$42.1 billion for 2025-26, with national debt climbing to 21.5% of GDP by 2025-26, increasing to 23.1% by 2028-29.

Wages & Employment

• Wages are forecast to grow by 3% in 2025 and 3.25% in 2026.

• Unemployment is expected to peak at 4.25% in the coming years.

Inflation & Cost of Living

• Inflation is forecast to settle at 2.5% by mid-2025.

• Energy rebates and rent assistance have helped slow price growth.

Global Trade Risks

• Trade tensions between China, the U.S., and Australia remain a concern.

• New retaliatory tariffs could impact export sectors like agriculture & mining.

Final Thoughts: What This Means for You

This Budget delivers a mix of cost-of-living relief, tax cuts, business reforms, and compliance crackdowns. While the measures offer some short-term financial relief, longer-term economic risks remain.

At Attune Advisory, we here to help you and your businesses navigate policy changes and optimise your financial strategies. Our approach is not only to help you remain compliant from a tax perspective, but plan for the future while assessing how other parts of the economy could affect you or your operations.

If you’d like to discuss how the Budget affects you specifically, get in touch with Attune Advisory today on 1300 866 113 or send us an email to start the conversation – you’ll be glad you did.

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