Note: These changes are proposals only and may or may not be made law. You should speak to your financial adviser to understand more about how these proposals could apply to you.
Federal Treasurer Jim Chalmers handed down the 2025-26 Federal Budget on Tuesday, 25 March 2025, the last before Labor heads to the polls. As expected, the era of budget surpluses has come to an end, with the government forecasting a return to deficits for the foreseeable future.
While Chalmers struck a cautiously optimistic tone on inflation, he was reluctant to declare all-out victory. The cost of living remains high and most of the Budget's highest profile proposals are aimed at easing the financial burden many Australians are facing.
That includes surprise tax cuts and more energy bill relief for Australian households. In this Budget wrap-up, we take a look at some of the biggest announcements and what they might mean for you and your family.
Extending the energy bill rebate
Another round of energy bill relief is on its way, with Labor pledging to extend its energy rebates until the end of the year. The move will cost around $1.8 billion and will see $150 in rebates automatically applied to energy bills for all Australian households and around 1 million small businesses.
Top up tax cuts
In a move that very few suspected was in the cards, the government announced it will be delivering another round of (admittedly, more modest) tax cuts. It plans to reduce the 16% tax bracket (which applies to earnings between $18,201 and $45,000) to 15% in July 2026, before further trimming it to 14% the following year.
Once implemented, these "top up tax cuts" will give the average worker an extra $268 from July 2026 and $536 every year from July 2027. Chalmers claims the combined tax cuts and energy rebates will save the average household with two earners around $15,000 over four years.
Historic investment in Medicare
Labor had made a number of announcements around healthcare ahead of the election, but by far the splashiest is a proposed $8.5 billion in extra funding for Medicare. The money will be spent over four years and will help make nine out of every ten visits to a GP free by 2030.
Described by the government as the single largest investment in Medicare since its inception, the package will also help deliver the next generation of healthcare practitioners, with funding for 400 nursing and midwifery scholarships and 2,000 new GP trainees each year by 2028.
Around $689 million has also been earmarked to help reduce the maximum price of medicines on the Pharmaceutical Benefits Scheme (PBS) from $31.60 to $25 a script. The move — which comes as US pharmaceutical companies have recently taken aim at the PBS — hopes to save Australians an estimated $200 million each year.
Helping Australians to buy a home
Rising property prices have been an ever-present thorn in the side of younger Australians and as part of its efforts to make home ownership attainable, the government has announced plans to modify its signature housing policy.
The Help to Buy scheme, which will commence later this year assuming Labor is re-elected, aims to reduce the upfront and ongoing costs of purchasing a home by letting Australians co-buy property with the government.
The government intends to broaden the scheme by increasing both the income caps for home buyers and the price caps for properties. The changes will inject an extra $800 million into the scheme, bringing its total cost to $6.3 billion.
Supporting renters
Recognising the mounting challenges faced by renters, the government will be increasing the maximum rates of Commonwealth Rent Assistance by 45% for around 1 million households. It will also look to increase rental housing supply by 80,000 over the next decade by refining the Build to Rent tax concessions announced in the 2023-24 Budget.
Student debt
Following previous commitments to reduce annual HECS-HELP repayments and increase the income threshold before graduates must repay their loans, the government will be offering further support in the form of a 20% cut to HECS-HELP debts. For the average graduate with an outstanding balance of $27,600, that will amount to around $5,520 in debt relief.
The government has also promised to make 100,000 fee-free TAFE places available each year if it retains government, with plans to make the program permanent nationwide.
Improving access to childcare
Labor will move closer towards its stated goal of providing universal childcare by scrapping the 'activity test' parents must pass before accessing subsidies.
Starting January 2025, parents will be guaranteed at least three days of subsidised childcare so long as they don't earn more than $533,280. Previously, they had to show they studied, worked or looked for work for at least 16 hours each fortnight — a requirement which the Productivity Commission said only hurt families without boosting workforce participation.
On top of that, a $1 billion fund will be established to support the construction and expansion of more than 160 new childcare centres. It's estimated that this will create around 12,000 more places for children in areas of need.
Supporting infrastructure and industry
The government will provide further investment in a number of infrastructure projects — with a focus on road infrastructure in particular — across all states and territories. The commitments laid out in the budget documents include:
- $7.2 billion to upgrade the Bruce Highway in Queensland
- $2.3 billion for Western Sydney infrastructure projects in New South Wales
- $2 billion to upgrade Sunshine Station in Victoria
- $350 million to upgrade the Kwinana Freeway in Western Australia
- $200 million for duplication of Stuart Highway in the Northern Territory
- $200 million to upgrade the Arthur Highway in Tasmania
- $50 million to upgrade the Monaro Highway in the Australian Capital Territory
Recovery efforts for communities affected by Cyclone Alfred
The full fiscal impact of Cyclone Alfred remains to be seen, but the Budget contains a handful of significant measures aimed at supporting those affected. That includes $1.2 billion to fund response and recovery efforts for Cyclone Alfred and other disasters and $200 million to support disaster resilience and risk reduction through the Disaster Ready Fund.
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