2025-26 Federal Budget Highlights

With the Federal Budget now released, there's plenty to unpack. Whether you're a family juggling finances, a business owner navigating new policies, or simply wondering how it impacts your day-to-day life, we've broken it all down for you. 

Here’s a straightforward look at what’s coming and how it could make a difference to your household or business.

Personal Tax Cuts

Starting 1 July 2026, there will be modest tax cuts for Australians. The tax rate for those earning between $18,201 and $45,000 will drop in two stages—from 16% to 15% in 2026-27, and down to 14% in 2027-28.

This means a maximum tax saving of $268 in the first year and $536 by the following year.

Additionally, the Medicare levy threshold is increasing from 1 July 2024. This adjustment will ensure more low-income earners are exempt from paying the levy, providing extra financial relief.

Energy Rebates

Rising energy costs continue to pose challenges, but relief is on the way. Households and small businesses can expect an automatic $150 energy bill rebate paid in quarterly instalments from 1 July 2025 to December 2025.

This extension ensures continued support in managing everyday expenses.

Healthcare Investments

Healthcare received a significant boost in this year’s Budget. Here’s what’s changing:

• Medicare Funding: $8.5 billion is allocated to improve Medicare, including higher rebates, 50 new urgent care clinics, and more access to bulk-billed GP services.
• Affordable Medicines: $1.8 billion over five years has been committed to making medicines cheaper under the Pharmaceutical Benefits Scheme.
• Women’s Health: $240 million will go towards improving reproductive health and menopause treatment options.

These initiatives signal a focus on keeping Australians healthier without the financial stress.

Childcare Changes

From 1 January 2026, families can look forward to three days of subsidised childcare per week. This replaces the current Child Care Subsidy (CCS) activity test and will be income-tested, ensuring it benefits families who need it the most.

This shift is designed to make childcare more accessible and affordable for young families juggling work and home commitments.

Housing Support

The Budget focuses on making housing more accessible through the ‘Help to Buy’ program. This initiative helps eligible Australians purchase a home with the Government providing up to 30% of the cost of an existing home or up to 40% of a new home.

Eligibility thresholds have increased, meaning more people can now participate. This program aims to ease the financial strain of buying a home by reducing the size of the deposit needed.

Additionally, the Government has announced a two-year ban on foreign purchases of established homes starting from 1 April 2025 to prevent ‘land banking’.

What about investors? Some tax law changes, including capital gains tax (CGT) amendments for foreign residents and managed investment trusts (MIT), have been delayed.

Support for Businesses

Businesses nationwide will benefit from several initiatives, including changes to competition rules and tax breaks. Here’s what’s coming:

• Non-Compete Clause Ban: By 2027, non-compete clauses will no longer be allowed for workers earning under $175,000. This is aimed at improving job mobility and competition between businesses.
• Beer Tax Freeze: From August 2025, the excise on beer will be frozen for two years, meaning no additional tax will be added to your favourite brew. Additional support is also being given to wine and alcohol producers, with excise caps increasing from $350,000 to $400,000 from 1 July 2026.
• Tax Compliance Funding: Nearly $1 billion will be given to the Australian Taxation Office (ATO) over four years to improve tax compliance and recoup lost revenue. This funding will target tax avoidance, shadow economy practices, and high-wealth groups.

These measures aim to support businesses, promote fairness, and ensure the tax system works better for everyone.

Economic Snapshot

The Australian economy is showing resilience but faces challenges. Here’s an overview:

• Growth: GDP growth is forecast at 2.25% in 2025-26 and 2.5% in 2026-27.
• Jobs: Unemployment is predicted to remain relatively low, peaking at 4.25%.
• Wages: Real wages are expected to grow steadily, bringing some much-needed relief to workers.
• Deficit: The underlying cash balance for 2025-26 will be a $42.1 billion deficit, with debt estimated at 21.5% of GDP.

Global trade tensions and cost-of-living pressures remain concerns. However, targeted support and ongoing investment aim to ease some of these burdens.

What Do These Changes Mean for You?

The Budget introduces thoughtful but modest measures that aim to support households, businesses, and the economy. From personal tax savings and childcare subsidies to business incentives and energy rebates, there’s relief across the board.

Have questions about how the Budget impacts you or your business? Reach out to LEAD Advisory Group for tailored advice—we’re here to help make sense of it all!