Last night, on 25 March 2025, Treasurer Jim Chalmers has handed down his last federal budget before the next Australian federal election. The budget featured a raft of key cost-of-living measures, including new energy rebates, changes to student debt and more bulk-billed GP visits. Here’s some of Progue’s key takeaways:
The Government has proposed reducing personal income tax rates for lower-income earners. From 1 July 2026, the tax rate for income between $18,200 and $45,000 will drop from 16% to 15%, and from 1 July 2027, it will decrease further to 14%.
These cuts mean all Australian taxpayers will receive a tax deduction of up to $268 in 2026, increasing to $536 in 2027. The Government describes these cuts as “modest but meaningful” cost-of-living relief while addressing bracket creep.
When combined with the existing Stage 3 tax cuts effective from 2024-2025, the average taxpayer will see their annual tax savings increase to $2,229 in 2026-27 and $2,548 in 2027-28, equivalent to around $50 per week. For instance, a person earning $79,000 will receive a total tax cut of $2,190 in 2027-28 compared to 2023-24 tax settings.
The Government anticipates that these tax cuts will encourage part-time and lower-income earners, especially women, to take on additional work hours, increasing total hours worked by 1.3 million hours per week (equivalent to 30,000 full-time jobs). Household disposable income is projected to rise by 1.9% by 2027-28.
The tax rates and income thresholds for residents are as follows:
| 2024-2026 (legislated) | 2026-27 (proposed) | 2027-28 (proposed) |
|---|---|---|
| Up to $18,200 – nil | Up to $18,200 – nil | Up to $18,200 – nil |
| $18,201 to $45,000 – 16% | $18,201 to $45,000 – 15% | $18,201 to $45,000 – 14% |
| $45,001 to $135,000 – 30% | $45,001 to $135,000 – 30% | $45,001 to $135,000 – 30% |
| $135,001 to $190,000 – 37% | $135,001 to $190,000 – 37% | $135,001 to $190,000 – 37% |
| More than $190,001 – 45% | More than $190,001 – $45% | More than $190,001 – 45% |
No changes were made to the LITO, which remains at a maximum of $700. However, the Medicare levy low-income thresholds will increase for 2024-25:
The Government will reduce HELP and other student debts by approximately $19 billion, cutting outstanding student debts by 20% before indexation on 1 June 2025. Additionally, a fairer student loan repayment system will be introduced from 1 July 2025, increasing the income threshold before repayments begin.
The Government will extend its energy bull rebate until the end of 2025 by providing a further two instalments of $75 (for a total of an additional $150) for households and small businesses.
The Government will provide $4.5 million over four years from 2025-26 to Services Australia to make system changes to ensure consistency with the passing of recent legislation to implement the Child Care Subsidy (CCS) Three Day Guarantee. According to the Government, this will ensure families are entitled to at least three days a week of subsidised early childhood education and care.
The CCS Three Day Guarantee will replace the CCS activity test from January 2026.
The Government will invest $722.8 million over four years to support apprenticeships and training, including:
The Government still intends to extend the instant asset write-off for small businesses, allowing full deductions on eligible assets under $20,000 until 30 June 2025. Assets above this threshold will be placed into a simplified depreciation pool.
The ACCC will receive $7.1 million over two years to strengthen the regulatory framework for franchising. Additionally, Treasury will develop options to extend protections against unfair trading practices.
From 2027, non-compete clauses will be banned for workers earning under $175,000 to prevent unfair restrictions on employment mobility.
The ATO will receive $5.7 million over four years to enforce the ban on foreign residents purchasing established properties from 1 April 2025, with exceptions for investments that significantly increase housing supply.
No new superannuation measures were announced. However, the legislated Super Guarantee (SG) rate increase to 12% will proceed from 1 July 2025. Employers must ensure that employee salary sacrifice arrangements do not offset their SG obligations.
Investments in new staff have resulted in faster processing times for Age Pension and Paid Parental Leave claims, improving efficiency in government services.
The information contained on this website and in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website and in this article are of a general nature only and are based on our interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
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