Federal Budget 2025/26 – What Does it Mean for Individuals and Families?
The FY26 Budget aims to provide modest financial relief while keeping inflation in check. While tax cuts and energy rebates offer some reprieve, major structural changes remain limited, with a strong focus on economic stability and cost-of-living assistance. Some high level points to note are:
Tax Cuts & Income Relief
From 1 July 2026, the 16% tax rate (for incomes between $18,201 and $45,000) will drop to 15%, and from 1 July 2027, it will further decrease to 14%.
This means an annual tax saving of $268 in 2026–27 and $536 from 2027–28 for those earning at least $45,000.
These reductions build on previous tax cuts from 1 July 2024, which delivered larger savings, particularly for middle and high-income earners.
Cost-of-Living Support
Energy bill relief: Households will receive a total rebate of $150 in two quarterly payments until 31 December 2025.
Medicare levy low-income thresholds will increase by 4.7% from 1 July 2024, easing the financial burden for lower-income individuals and families.
Student loans: A 20% reduction will apply to all outstanding Higher Education Loan Program (HELP) and other student debts.
Medicine costs: From 1 January 2026, the price of PBS-listed medications will drop from $31.60 to $25 per script.
Bulk billing boost: Additional funding will improve access to bulk-billed GP services.
Housing & Home Ownership Support
Expansion of the Help to Buy shared equity scheme, increasing income caps and property price limits to assist more Australians in purchasing a home.
A two-year ban (from 1 April 2025) on foreign buyers and temporary residents purchasing existing homes, aimed at increasing housing supply for Australians.
Retirement & Superannuation
The Superannuation Guarantee (SG) will increase to 12% from 1 July 2025, ensuring better long-term savings for workers.
Deeming rates (used for social security payments) will remain frozen at 0.25% (lower) and 2.25% (upper) until 30 June 2026.
The Division 296 tax on superannuation balances exceeding $3 million is still in the pipeline but not yet legislated.
Tax Compliance & Monitoring
The Personal Income Tax Compliance Program will be expanded, meaning increased scrutiny on individual tax returns.
To read the full report on the Federal Budget, click the button below to access the analysis and insight shared by our colleagues in the Bentleys Network. This collaboration on specialist topics is an example of the benefits we can share with our clients since joining the Bentleys Network in July last year. Read more about our membership of the Bentleys Network here.
