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Quick takes on Australia 2025/2026 federal budget.

Written by ,
 25 April 2025.

The Labor federal government recently announced its 2025/2026 pre-election budget. Key to this were proposed measures to ease cost-of-living pressures.

Other measures ranged from a one-off reduction of university student loans to easing the pressure on housing affordability. Since the budget was released, the Labor government has set the federal election for 3 May 2025.

Economic summary by the numbers

  • Real gross domestic product – budgeted growth of 2.25%
  • Budget deficit of AU$ 42.1 billion in 2025/2026 (up from AU$ 27.6 billion in 2024/2025)
  • Gross debt increased by AU$ 283 billion, with total debt expected to reach AU$ 1.22 trillion in 2025/2026
  • Growth in federal government spending is expected to peak at 28.5% of GDP by next year
  • Unemployment rate of 4.25%
  • CPI expected to average 3% in 2025/2026

Quick takes

No.ItemDescriptionCommentary
1Individuals (tax cuts)Personal income tax cuts (to relieve cost of living pressures) for all Australian income tax residents by:

  • The AU$ 18,200 – AU$ 45,000 income tax bracket & tax rate  reduced as follows:
    • 15% – for 2026/2027 year
    • 14% – for 2027/2028 year

Tax rate remains at current 16% rate in this bracket for 2024/2025 & 2025/2026

Equates to modest tax cuts of:

  • AU$ 268 (2026/2027 year)
  • AU$ 536 (2027/2028 year)
2Individuals (other measures / changes)
  • Energy cost relief
  • Student loan repayments changes
  • Restriction of foreign ownership of housing
  • Extension of energy cost relief due to expire on 30 June 2025.  Two additional quarters of AU$75 rebates to 31 December 2025
  • 20% reduction (one-off) on university student loans (apply 1 June 2025)
  • Restrict foreign persons (including temporary residents) owning established dwellings for two years (from 1 April 2025)
3Multinational tax  & deferral
  • Deferral of measures to broaden foreign residents capital gains tax
  • Defer start date of extended clean building Management Investment Trust (“MIT”) Withholding Tax concession
  • Strengthening tax integrity
  • Extension of additional tariffs
  • Deferred from 1 July 2025 to when law receives Royal Assent
  • As yet no draft legislation released
  • Applicable for data centres and warehouses that meet relevant energy standards
  • Budgeted for AU$999 million over 4 years for tax compliance activities
  • Existing 35% additional tariff on imported goods from Russia and Belarus extended to 24 October 2027
4Government grants (including R&D Tax Incentive)NIL changesA case of wait & see with the current Australian Taxation Office Compliance Risk Review of the entire R&D Tax Incentive
regime.
5Other
  • Limit employer’s use of non-compete clauses
  • Instant Asset Write-off for small businesses & extension
  • Beer excise indexation frozen for two years
  • Not law but non-compete clauses will only apply to high income earners (currently for gross annual wage of AU$ 175,000)
  • Unclear if proposal to extend this to 30 June 2025 will proceed. The Instant Asset Write-off allows a tax deduction in full for depreciating assets that cost less than AU$ 20,000.
  • Pause indexation on draught beer excise and excise equivalent customs duty rates for a two-year period from August 2025

How Acclime can help

If Australia is an appealing location for your business, get in touch with Acclime. Our teams of accountants, tax experts, and legal professionals are based in Australia’s major cities and can deliver integrated solutions that enable your business to maximise all the opportunities and incentives that Australia has to offer.

Disclaimer

This information is of a general nature and is not intended to address the circumstances of any particular individual or entity.  We would recommend addressing your specific circumstances as relates to these topics with an appropriately qualified expert.

Quick takes on Australia 2025/2026 federal budget

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