The 2025 Federal Budget has been delivered with a focus on practical changes for everyday Australians. It introduces a range of measures designed to ease financial pressure and support economic growth. Here’s a look at the latest announcements.
The Government has announced their income tax cuts over the next two years, targeting the lowest marginal tax rate. Starting 1 July 2026, the rate drops to 15%, and by 1 July 2027, it falls further to 14%.
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| Income tax rates | |||
|---|---|---|---|
Thresholds ($) |
Current Rates |
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 |
>$190,000 |
45 |
45 |
45 |
These tax cuts will save you $268 per annum in the 2027 financial year and $536 per annum in the 2028 financial year, based on earning at least $45,001. That’s more money in your pocket to spend on the things you need.
From 1 January 2026, four out of five medications on the Pharmaceutical Benefits Scheme (PBS) will cost a maximum of $25, down from $31.60. Pensioners will continue to pay $7.70 for PBS medicine, locked in until 2030.
Expect an additional subsidy of $75 per quarter until December 2025, adding up to $150 for households and eligible small businesses.
If you have children or grandchildren, changes to the Higher Education Loan Programs and other student debts will be slashed by 20% before the indexation on 1 June 2025. Plus, the income threshold for repaying loans will increase from $54,435 in 2024–25 to $67,000 in 2025–26.
In addition to these recent budget updates, there are some important changes to superannuation contributions and pensions:
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| NCC Bring forward provisions | |||
|---|---|---|---|
TSB1 |
Age2 |
Bring Forward |
NCC Cap |
< $1.76 mil |
74 or under |
3 years |
$360,000 |
$1.76 mil to <$1.88 mil |
74 or under |
2 years |
$240,000 |
$1.88 mil to <$2 mil |
74 or under |
No bring forward |
$120,000 |
$2 mil + |
<75 |
Nil |
Nil |
1 Total Superannuation Balance (TSB) as at preceding 30 June.
2 As at 2 July.
Note: Individuals in existing bring-forward arrangements will not benefit from indexation.
The Government has yet to announce whether the deeming rate freeze that was extended until 30 June 2025, will continue. This decision will impact clients receiving means-tested Centrelink benefits.
With the end of the financial year fast approaching, it's the perfect time to start thinking about potential opportunities and how you can make the most of them.
If you're under 71 at the end of financial year and earn under $45,400, for every dollar you make as an after-tax contribution, the Government will make a co-contribution of 50 cents, capped at $500 – that’s a 50% return on your money. If you earn between $45,401 to $60,400, or contribute less, you may still be eligible for a partial or reduced co-contribution.
Boost your spouse's super and get a tax offset. If your spouse earns less than $37,000, contribute up to $3,000 for an 18% tax offset ($540 tax offset). Contributions below this or if your spouse earns up to $40,000 may still qualify for a partial or reduced tax offset.
Make a personal contribution and claim it as a tax deduction. Your marginal tax could be as high as 47%, but most tax-deductible super contributions are taxed at 15%. If your Total Super Balance as of 30/06/2024 is less than $500,000, you may be eligible to use concessional contribution cap space from previous years, known as carry-forward contributions.
EOFY is also a perfect time to review your Centrelink information to ensure all income and asset valuations/estimates are accurate.
