The 2025 Federal Budget introduces key financial updates aimed at easing cost-of-living pressures, adjusting tax settings, and refining superannuation rules. These changes may impact your income, savings, and retirement strategy. Here’s a breakdown of the major proposals and what they mean for you.
1. Income Tax Cuts
This year’s budget introduces additional tax cuts:
- From 1 July 2026, the 16% tax rate on incomes between $18,201 and $45,000 will drop to 15%, then further to 14% from 1 July 2027.
- The Medicare levy low-income threshold will rise by 4.7% for singles, families, seniors, and pensioners starting 1 July 2024.
Lower-income earners may see reduced or waived Medicare levy payments. By 2026, everyone will benefit from lower taxes on the first $26,800 earned above the tax-free threshold. If you make concessional super contributions, consider reviewing them to ensure tax efficiency.
2. Energy Bill Support
The government is extending last year’s rebate with an additional $150 energy credit for households and small businesses, valid until 31 December 2025. This rebate will be automatically applied to your energy bill in two $75 payments after 1 July 2025.
3. Division 296 Tax on High Super Balances
The Treasurer Jim Chalmers proposed in 2023 for an additional 15% tax to be charged on super earnings for individuals with superannuation balances exceeding $3 million, effective from 1 July 2025. Tuesday night’s Budget showed no sign of the Government backing down on this controversial Bill despite wide criticism from industry experts, with the SMSF Association calling it “ill-conceived” and the Coalition pledging to repeal it if elected. Most advisers are suggesting people that’s potentially impacted to wait until the bill becomes legislation before taking any action to withdraw funds.
4. Student Loan Relief
From July 1, 2025, student loan debts will be reduced by 20%, and reforms will be introduced to make repayments fairer, potentially easing financial burdens for graduates.
5. Childcare Subsidies
Starting 1 January 2026, families earning under $533,280 per year will be eligible for a three-day-per-week childcare subsidy.
If you have young children, you may receive government-subsidized childcare for at least three days per week.
6. Strengthening Medicare
- The Pharmaceutical Benefits Scheme (PBS) costs will decrease for Medicare cardholders.
- The government will also expand bulk billing incentives, encouraging more healthcare providers to offer bulk-billed services.
You’ll pay less for prescription medicines and have access to more bulk-billed medical services.
7. Women’s Healthcare Support
The government has introduced a Women’s Health Package, which includes subsidies for contraception, menopause treatments, and endometriosis medication. Women can expect reduced costs on essential healthcare treatments.
We’re here to help
From tax reductions and energy rebates to superannuation changes, this budget introduces various measures that may affect your tax, investments, and retirement planning.
At Chan & Naylor, we can help you navigate these updates and optimise your financial strategy. These proposals have not yet been legislated so it would be wise to consult with Chan & Naylor before making financial decisions based on the 2025 Budget.
About Chan & Naylor
Established in 1990, Chan & Naylor has been a trusted partner for thousands of businesses and investors across Australia. Based in Sydney, we provide expert accounting services tailored to your needs. Choosing Chan & Naylor means you’re not just selecting a service provider; you’re gaining a partner aligned with your business goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in business tax and investments. Contact us today so we can discuss how we can help you.
Disclaimer
This article serves as general information only and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments.
