On Tuesday 25 March 2025, Treasurer Jim Chalmers announced the 2025–26 Australian Federal Budget with updates to key economic forecasts and laying the groundwork for a potential federal election
The focus of our summary is on the key tax related announcements of the budget.
Personal Income Tax Cuts
The budget introduced unexpected new cuts in personal income tax, building on the initial round implemented from July 2024.
Commencing July 1, 2026, taxpayers earning between $18,201 and $45,000 will benefit from a reduced rate, dropping from 16% to 15%. This rate is set to further decrease to 14% from July 1, 2027.
Under the government’s new tax cuts:
An Increased Medicare levy for low-income thresholds.
To alleviate the cost of living, the Medicare levy low-income thresholds for singles, families, seniors, and pensioners have been increased. This adjustment ensures that individuals with lower incomes either pay no Medicare levy or pay at a reduced rate, aligning with 2024 thresholds in the table below: 
Energy bill relief
The energy rebate has also been extended until the end of 2025 for eligible Australian households and small business giving households an extra $150 off their energy bill this year. ($75 per quarter until 31 December 2025)
The federal government announced the energy bill relief plan of budget night as part of its re-election strategy. Treasurer Jim Chalmers stated that past rebates had “helped take some of the sting out of energy costs”.
HECS\HELP repayment threshold being increased
Effective June 1, 2025, the government will implement a one-time 20% reduction in HELP (Higher Education Loan Program) debts before the next indexation. This reduction is expected to save graduates with an average debt of $27,600 approximately $5,520.
Furthermore, the minimum repayment threshold for HELP debts will rise from $54,435 in 2024-25 to $67,000 in 2025-26. Repayments will now be based only on income exceeding this new threshold.
The Small business $20,000 instant asset write-off has been abolished
The federal government has slashed the popular instant asset write-off scheme from 30 June 2025, ending the current $20,000 threshold and reducing this to only $1,000 which will negatively impact many of our small business clients from 1 July 2025.
Your Suntax Team
