Federal Budget announcement 2025–2026 updates for individuals

The key considerations for individuals as a result of the 2025-2026 Federal Budget announcement are as follows:

1. Further tax cuts for every Australian taxpayer
From 1 July 2026, further tax cuts will be made available to all taxpayers, which are in addition to previously announced tax cuts which have been progressively implemented from 1 July 2024.
The proposed tax cuts are seeking to provide further cost of living relief and return some bracket creep.
Broadly, the proposed tax cuts will come into effect from 1 July 2026 where the 16% tax rate will be reduced to 15%; further from 1 July 2027 this 15% tax rate will be reduced to 14%, as shown below.

The tax rate reductions provide that anyone earning up to and more than $45,000 will receive a tax cut of up to $268 in each of the 2026-27 and 2027-28 financial years.

2. Medicare levy changes
The Government has announced it will increase the Medicare low-income threshold for singles, families, seniors and pensioners.
This means, that the following people will exempt from paying the Medicare Levy;
a) Singles earning up to $27,222
b) Families earning a combined $45,907, with an extra $4,216 per dependant child or student;
c) Single seniors and pensions earning $43,020; and
d) Families or seniors and pensioners earning $59,886.
3. Pharmaceutical Benefits Scheme (PBS)

Further to the Medicare Levy changes announced, the Government have said that the maximum cost of medicines on the PBS will be lowered from $31.60 to $25 per script.
This change will bring the co-payment towards Medicines to its lowest level in 20 years and will apply for everyone with a Medicare card and no concession card.
For pensioners, the maximum co-payment will remain frozen at $7.70.
New medicines have been also added to the list.

4. Wage increases for aged care and childcare workers
The Government has announced it will provide $2.6 billion over five years, from March 2025 for pay rises for aged care nurses. $3.6 billion has also been provided for to lift the wages of early educators through the Worker Retention Payment.

5. Increase in apprentice incentive payments
The incentive payments program has been doubled from $5,000 to $10,000 from 1 July 2025 for eligible apprentices who train in the housing and construction sector.

6. Three days of subsidised care to more families
Three days of subsidised care will be made available to all families earning less than $533,000, replacing the existing “activity test” for those days of care and will begin in January 2026.
It means parents will no longer have to work, study or be looking for work for at least 16 hours each fortnight to access childcare subsidies.

7. Extension of energy bill relief
The energy bill relief extension provided to small businesses has also been extended to households, through until 31 December 2025.
Every household will receive two further $75 rebates off their quarterly energy bills.
Again, most customers will automatically have the relief continue to be applied via their retailer and won’t be required to take any action.

8. Student debts to be reduced by 20 per cent
Subject to the passage of legislation, all outstanding Higher Education Loan Program (HELP) and other student loans will be reduced by 20 percent.
This is estimated to remove $16 billion from the student loan accounts of around 3 million Australians.
Proposed changes will also include a ‘marginal repayment system’ with a higher minimum repayment threshold.

9. Expansion of Help to Buy scheme for First Home Buyers
The previously legislated scheme will be expanded to allow more people to co-purchase a home with the Government.
Singles earning up to $100,000 and couples earning up to $160,000 will be able to use the scheme to buy a home, with the government covering up to 40 per cent of the cost and taking a portion of the home’s equity. Owners can then buy out the government’s stake over time.
The cap on eligible properties will also be lifted, with price limits dependent on the state and whether the property is in a capital city or elsewhere.