WEEKLY E-MAIL

31 March 2025

KEY TAKEAWAYS FROM BUDGET NIGHT 2025

By Sam Eley

On the 25th of March 2025, Treasurer Jim Chalmers and the Federal Government handed down its Budget for the 2025-26 financial year. A summary of the key announcements is below:

TAXATION

Medicare Levy threshold increased

The Medicare levy low-income thresholds for singles, families and seniors and pensioners will be increased from 1 July 2024. The threshold for singles will be increased from $26,000 to $27,222, for families from $43,846 to $45,907. For single seniors and pensioners from $41,089 to $43,020, and the family threshold for seniors and pensioners will be increased from $57,198 to $59,886.

For each dependent child or student, the family income thresholds will increase by a further $4,216, up from the previous amount of $4,027.

Reduction in the lower tax rate

In addition, the following new tax rates are proposed:

• From 1 July 2026, the 16% per cent tax rate, which applies to taxable income between $18,201 – $45,000, will be reduced to 15%, and
• From 1 July 2027, this tax rate will be reduced further to 14%.

SOCIAL SECURITY

Cheaper cost of medicines

The Government proposes to lower the Pharmaceutical Benefits Scheme (PBS) general patient co-payment from $31.60 to $25.00 on 1 January 2026.

OTHER ANNOUNCEMENTS

Restricting foreign ownership of housing

The Government proposes to ban foreign persons (including temporary residents and foreign-owned companies) from purchasing established dwellings for two years from 1 April 2025 unless an exception applies. Exceptions to the ban will include investments that significantly increase housing supply or support housing availability on a commercial scale and purchases by foreign-owned companies to provide housing for workers in certain circumstances.

Energy bill relief fund extension

It is proposed to extend the existing Energy Bill Relief to every household, which will continue to receive two $75 rebates off their energy bills through 31 December 2025.

Higher Education Loan Program (HELP) reduction

The Government proposes to reduce all outstanding HELP and other student debts by 20% with effect before indexation is applied on 1 June 2025. This is in addition to the recent reform limiting future indexation and retrospectively reducing the indexation applied in 2023 and 2024.

From 1 July 2025, the Government will also increase the amount that people can earn before being required to repay their student loans, with thresholds increasing from $54,435 in 2024/25 to $67,000 in 2025/26.

Childcare – confirmation on 3-day guarantee

The Government confirmed it is replacing the Child Care Subsidy (CCS) Activity Test from January 2026 to guarantee at least 3 days of subsidised early childhood education and care (ECEC) each week for children who need it.

From January 2026, all families will be eligible for at least 72 hours of subsidised ECEC per fortnight, regardless of their activity levels. Families earning over $533,280 in 2024/25 are not eligible for subsidised care.

SUPERANNUATION

While not directly addressed during the budget announcements, the expectation is that the Government intends to move forward with the proposed new tax on superannuation member balances exceeding $3m.

We expect this to continue to be a hot-button topic as we enter election season.

Sam Eley
Senior Financial Planner
Authorised Representative No. 1234685

If you have any questions or comments, please email me at sam@gfmwealth.com.au

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