Budget 2025 – Families & Individuals Insights
The budget provides cost-of-living support for families and individuals.
The cost-of-living relief is modest and the tax cuts commence from 1 July 2026 to help ensure they don’t add to inflationary pressures.
We have highlighted some of the key tax measures affecting Australian individuals and families:
- New (modest) tax cuts
- Increasing Medicare levy low-income thresholds
- Power bill relief
- Student support
- Support for access to housing
- Cost of medicine and access to bulk billing
- Tax compliance programs
If you have any questions as to how this budget impacts you and your family, please contact your local Bentleys advisor. We are here to help you get where you want to be.
CLICK HERE FOR INSIGHTS ON WHAT FEDERAL BUDGET 2025 MEANS FOR AUSTRALIAN BUSINESSES
ACCESS THE FEDERAL BUDGET 2025 ANALYSIS REPORT
FAMILIES & INDIVIDUALS
- New (modest) tax cuts
There are modest new income tax cuts that apply from 1 July 2026.
From 1 July 2026, the 16% tax rate (which applies to taxable income between $18,201 and $45,000) will be reduced to 15%. From 1 July 2027, this tax rate will reduce to 14%.
For individuals with taxable income of at least $45,000, this equates to a tax saving of $268 per year in 2026-27 and $536 per year from 2027-28.
The government highlights that these new tax cuts expand on the previous tax cuts that came into effect from 1 July 2024. The previous tax cuts were more extensive. For example, from 1 July 2024, an individual with taxable income of $40,000 received a tax cut of $654. While an individual with taxable income of $100,000 received a tax cut of $2,179. Those on the top marginal rate received a tax cut of up to $4,529.
The tax brackets and rates for the current financial year and those that will apply up to and from 1 July 2027 are shown below.
| TAX RATE | 2024-25 |
|---|---|
| 0% | $0 – $18,200 |
| 2024-25 & 2025-26: 16% 2026-27: 15% From 2027-28: 14% | $18,201 – $45,000 |
| 30% | $45,001 – $135,000 |
| 37% | $135,001 – $190,000 |
| 45% | >$190,000 |
- Increasing Medicare levy low-income thresholds
The government will increase the Medicare levy low-income thresholds by 4.7% for singles, families, and seniors and pensioners from 1 July 2024.
- Power bill relief
The government is extending energy bill relief for all households and approximately one million small businesses. Households and eligible small businesses will receive a total rebate of $150 in 2 quarterly payments to 31 December 2025.
- Student support
The government has confirmed in the budget the previous announcement that it will reduce all outstanding Higher Education Loan Program (HELP) and other student loan debt by 20%. This is in addition to previous changes to cap the indexation applied to student loans.
- Support for access to housing
There are additional measures in the budget to support access to housing supply including:
- Expanding the shared equity Help to Buy scheme by increasing the income caps and property price limits
- Banning foreign buyers (including temporary residents and foreign-owned companies) from purchasing established dwellings for two years from 1 April 2025
- Cost of medicine and access to bulk billing
The budget includes additional measures to support access to cheaper health care.
This includes reducing the cost of medicines by funding a further reduction in the price of PBS-listed medications, cutting the cost of a script from $31.60 to $25 from 1 January 2026. The government is also providing additional funding to increase access to bulk billing.
- Tax compliance programs
The budget includes additional funding to expand tax compliance activities including extending the Personal Income Tax Compliance Program.
RETIREMENT & SUPERANNUATION
The 2025 federal budget has left retirement and superannuation untouched.
The Super Guarantee is due to increase again on 1 July to 12%, and deeming will remain frozen.
However, similar to last year, the proposed Division 296 tax still hovers in the background of Labor policy.
- Super guarantee to increase to 12% on 1 July 2025
On 1 July 2025, the Superannuation Guarantee (SG) rate in Australia is set to increase from 11.5% to 12%. This marks the final step in a series of planned increases aimed at enhancing retirement savings for Australian workers.
The SG rate has been progressively rising by 0.5% annually since 1 July 2021, when it was 9.5%, to reach the legislated target of 12%. This increase means that employers will be required to contribute 12% of an employee’s ordinary time earnings into their superannuation fund.
- Deeming rates
Last year, it was announced that deeming rates on social security would remain frozen at 0.25% (lower) and 2.25% (upper) until 30 June 2025. Although this was not mentioned in this year’s budget papers, the Department of Social Services has confirmed that the freeze will continue for another year.
- Division 296 tax
As previously announced, the government intends to reduce tax concessions for individuals with a Total Superannuation Balance (TSB) exceeding $3 million from 1 July 2025. While the budget did not reiterate this policy or provide further details, it is still expected to proceed under a Labor government.
As a refresher, individuals with a TSB over $3 million will be subject to an additional tax of 15% on ‘earnings.’ ‘Earnings’ will be calculated based on the difference in TSB at the start and end of the financial year, adjusted for withdrawals and contributions. Negative ‘earnings’ can be carried forward to offset future year earnings. Individuals with balances below $3 million will be unaffected, and there are no provisions for indexing this $3 million threshold over time.
The Coalition does not support this policy and has pledged to repeal it if elected. The policy itself is not yet law, and given the expected implementation date of 1 July 2025, it may be delayed if the Labor government is re-elected.
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Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.
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