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Federal Budget 2025: Key Takeaways for Your Tax, Finance & Lending Needs

The 2025 Federal Budget introduces several financial and tax changes aimed at easing the cost of living, with proposed tax cuts, energy rebates, student loan relief, and updates to social security.

As an LZR client, understanding these changes is essential for your tax planning, financial strategies, lending options, and overall business decisions. Below, we outline the key budget measures and how they may impact you.

Taxation Implications

  • Personal tax cuts: From 1 July 2026, the 16% tax rate on incomes between $18,201 and $45,000 will decrease to: 
    • 15% from 1 July 2026, and
    • 14% from 1 July 2027.

There will be no changes to the other marginal tax rates and thresholds. 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

  • Potential tax savings: Taxpayers earning $45,000 or more could save up to $536 annually from 2027 onwards.

Cost of Living & Household Finances

  • Energy bill relief: Households and small businesses will receive a $150 rebate on electricity bills, automatically applied from July to December 2025.

  • Student loan reductions: A 20% cut to student loan balances will be applied before annual indexation on 1 June 2025. Additionally, the repayment threshold will rise to $67,000, reducing financial strain on borrowers.

  • Lower prescription costs: From 1 January 2026, the maximum price for PBS medicines will drop from $31.60 to $25 per script, benefiting individuals managing long-term health expenses.

  • Expanded Medicare bulk billing incentives: Additional funding aims to increase bulk billing rates, with nine in ten GP visits expected to be covered by Medicare by 2030.

Lending & Property Market Changes

  • Expanded ‘Help to Buy’ scheme: Government support for homebuyers will increase, offering equity contributions of up to 40% for new homes and 30% for existing homes.

  • Higher eligibility limits: Income caps for singles will rise to $100,000, while joint applicants and single parents can qualify with incomes up to $160,000—potentially opening more financing opportunities.

Social Security Updates

  • Subsidised child care guarantee: From January 2026, families will be entitled to 72 hours of subsidised Early Childhood Education and Care per fortnight, even without meeting certain work or study requirements.

What’s Next?

Many of these budget measures require approval before becoming law. With a Federal Election expected soon, the timeline for passing these changes remains uncertain. Full proposal can be found on the government website.

Now is the time to review how these proposals might affect your tax position, borrowing capacity, investment strategy, and business financial planning. Speak to our team to explore your options and stay ahead of legislative changes.