Federal Budget 2025-26 – Winners and losers but how much does it really mean?

Who are the Winners and Losers?

Winners

• From 1 July 2026, the tax rate for the $18,201-$45,000 tax bracket will be reduced from 16% to 15%. A year later, the tax rate will reduce to 14%. This equates to $5 a week better off in the 2026/27 year, a modest saving to say the least. 

• For the 2024-25 income year, the Medicare levy low-income threshold for singles has increased to $27,222 (from $26,000). Similar increases have been proposed for the family threshold (including family threshold for seniors and pensioners)

• Prior to 1 June 2025 indexing of existing HELP loans, the Government will wipe 20% of all outstanding student debts. 
• Compulsory HELP repayments will commence when taxpayers earn over $67,000 from the 2025-26 year. Currently, compulsory HELP repayments are required to be made by taxpayers earning over $54,435 per year.
  

• The Government rebate has been extended until the end of 2025 with a further 2 instalments of $75 for households and businesses. 

• The bulk billing incentive eligibility will be expanded to cover all Australians from 1 November 2025. 
• The Government is lowering the maximum cost of medicines on the PBS. From 1 January 2026, the maximum co-payment will be lowered from $31.60 to $25.00 per script. 
• 50 additional Medicare Urgent Care Clinics to be opened across the country.

Losers

• Despite the cost-of-living focus, JobSeeker and rent assistance will not receive a top-up

• After years of extending the instant asset write-off for small businesses, the Government has made no announcement to extend the $20,000 instant asset write-off measures beyond 30 June 2025.
  
  

What didn’t get mentioned? 

The Government avoided introducing any measures that had to do with Superannuation. The impending Division 296 regime being the big elephant in the room, the fact that the Labor Government deliberately ignored discussing this proposal in the Budget indicates their intention to try to with implement this measure with no material changes. So we’re left yet again in limbo as the rules are yet to be legislated and still face some fierce opposition. 

As a reminder, the proposed Div 296 measure is an additional 15% tax on superannuation earnings for individuals with an adjusted total superannuation balance over $3m. Controversially, this includes the unprecedented measure of taxing unrealized capital gains, and the $3m threshold not being subject to indexing.

The proposed Div 296 Bill is currently still before the Senate. The Coalition and Greens Senators did not support the Bill in its current form. Unless it can be passed quickly when Parliament resumes, it will lapse once the Prime Minister calls the Federal election. 

Should the Labor Government get re-elected in May, it is likely the Bill will be re-introduced for consideration

How much does all this matter?

All Budget proposals are just that until they are passed through Parliament and legislated. There are no guarantees that any of the above will become reality for Australians, and there is further uncertainty of these measures getting passed with the impending Federal Election. 

At the time of writing this blog, the Federal Election still hasn’t been called. It will have to be held by May 17 the latest but could be May 3 or May 10. Currently, the Coalition is leading in the polls (as at 26 March 2025), so in the event the Labor Government doesn’t get re-elected all of the above will become null and void, and we’ll have to see what the Coalition proposes.

Time will tell!