With the recently announced election on May 3rd, Labor’s fourth Budget again focused on cost of living, health, education and housing. This budget wraps the term of Albanese’s first government without locking the government into too many programs next term, however many more may be announced as part of the election campaign. Minor tax cuts were announced, along with continuation of Energy bill relief, student loan reduction, and medicine and Medicare changes. There was little in the way of changes to small business considerations.
A review of key changes for individuals can be found below.
Future Financial Year tax cuts
From 1 July 2026
The Government has announced it will deliver new tax cuts to all taxpayers from 1 July 2026, by reducing the tax rate for taxable income between $18,201 and $45,000 as follows:
| Thresholds ($) | Rates in 2024-25 and 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% |
| >190,000 | 45% | 45% | 45% |
The table below summarises the potential tax savings based on a range of taxable incomes:
| Taxable income | Annual tax savings 2026/27 compared to current financial year | Annual tax savings 2027/28 onwards compared to current financial year |
| $25,000 | $68 | $136 |
| $35,000 | $168 | $336 |
| $45,000 or more | $268 | $536 |
Childcare
‘3-day guarantee’ for child care subsidy
Families will be eligible for at least 72 hours per fortnight (three days per week) of subsidised Early Childhood Education and Care (ECEC) without having to meet certain activity requirements (such as paid work, volunteering and studying). A family income test limit ($533,280 in 2024/25) will still need to be met to be qualify for subsidised care. This measure is legislated to start from 1 January 2026.
Social Security
Deeming rates
The Government has not made any announcements in relation to changes to any social security allowances or pensions.
Social security deeming rates are currently frozen at 0.25% and 2.25%. The freeze on deeming rates is scheduled to end on 30 June 2025, however there is speculation that the Government would make an announcement regarding a possible extension.
If the deeming rate freeze ends on 30 June 2025, many social security recipients will see a substantial reduction in their rate of payment. For example, if deeming rates increase to 4% and 6%, a single Age Pensioner homeowner with $310,000 in financial investments would have seen a reduction in their Age Pension of $5,812.50 p.a. under the income test
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 of $75. 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 will 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 2024/25 to $67,000 in 2025/26. Also, repayments will be calculated on just the income earned above the $67,000 threshold, not on total income. The list of eligible student loans is covered in the measure above
- 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 concession cardholders will still only pay the subsidised 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. Also, 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.
- Expanded ‘Help to Buy’ program:
The Help to Buy program was established to assist eligible individuals with the purchase of a principal place of residence. Expected to commence later this year, the Commonwealth will provide an equity contribution up to 30% of the purchase price of an existing home and up to 40% of the purchase price of a new home. The income cap and property price caps used to determine eligibility will increase. For singles, the income cap will increase from $90,000 to $100,000. For joint applicants (and single parents), the income cap will increase from $120,000 to $160,000. The property price cap depends on the location of the property.
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