Federal Budget 2025-26: Client Overview

On Tuesday night, Treasurer Jim Chalmers handed down the 2025-2026 Budget.

The big-ticket item? Personal income tax cuts. While they make for a headline-grabbing announcement, the reality is a modest saving – up to $268 in 2026–27, rising to $536 in 2027–28. A welcome boost for some, but unlikely to transform household budgets.

Behind the scenes, however, the ATO has been handed nearly $1 billion to extend and enhance compliance programs. The message is clear: expect tighter enforcement and increased scrutiny in the years ahead.

Two previously announced – but still unlegislated – measures remain on the books:

• The proposed 30% tax on super earnings for balances over $3 million, and
• The $20,000 instant asset write-off for small businesses in 2024–25.

Both measures are currently stalled in Parliament and are expected to lapse if not passed before the upcoming Federal election.

This is a Budget crafted with voters in mind, delivering more than $7 billion in new spending for 2025–26 and $20 billion across the next five years. In many ways, it’s more of the same – extending previous promises and initiatives for another year, with a few crowd-pleasers added in.

Like last year, the real test will be whether these initiatives tame inflation and stimulate meaningful economic growth. GDP is forecast to grow slowly – 2.25% in 2025–26 and 2.5% in 2026–27 – amid a backdrop of global economic uncertainty and growing trade tensions.

The deficit deepens to -$42.1 billion in 2025–26, with little immediate relief in sight.

KEY BUDGET MEASURES

• Income tax cuts delivering up to $268 in 2026–27 and $536 from 2027–28.
• Almost $1 billion in additional ATO funding to extend and enhance compliance and enforcement programs.
• The proposed 30% tax on super earnings for balances above $3 million and the $20,000 instant asset write-off for small businesses remain unlegislated and may lapse if not passed before the election.
• $150 energy bill rebate extended until the end of 2025, supported by $180 billion in funding.
• $8.5 billion for Medicare, including increased payments to GPs, 50 new urgent care clinics, and a bulk-billed GP service.
• $1.8 billion over five years to reduce the cost of PBS medicines.
• $240 million for women’s health initiatives, including reproductive care and menopause support.
• $500 million to reduce student HELP debt by 20% and adjust repayment thresholds from 1 July 2025.
• $800 million to expand the ‘Help to Buy’ co-ownership housing scheme, lowering deposit requirements.
• From 1 January 2026, three days of subsidised childcare per week (income tested) will replace the current activity test.
• From August 2025, the excise on beer will be frozen for two years.

Download our comprehensive Federal Budget Overview.

To discuss how this Federal Budget may impact your circumstances, contact your PPT advisor at (03) 5331 3711 or ppt@ppt.com.au.