Insights
Federal Budget 2025/26
Last night, Treasurer Jim Chalmers handed down the 2025/26 Federal Budget, focusing on cost-of-living relief, tax cuts, and healthcare investments. Several of the proposed measures could influence your financial decisions and strategies.
For a breakdown of what it means for you, watch our video featuring insights from Ian Fox, Director & Executive Planner, Nick Dwyer, Partner, and Paul Gaffney, Group Head of Wealth.
Key highlights include:
Tax cuts – The first marginal tax rate will be reduced from 16% to 14% over two years, starting 1 July 2026. This means all taxpayers earning over $18,200 will receive a $268 tax cut in 2026-27, increasing to $536 per year from 2027-28. The majority of the benefit will go to workers earning between $45,000 and $135,000.
| Income | Now | 1/07/2026 | 1/07/2027 |
|---|---|---|---|
| $18,200 – $45,000 | 16% | 15% | 14% |
| Saving | $268 | $536 |
Energy bill relief – Households and small businesses will receive an additional $150 in power bill rebates, with support automatically applied over two quarterly instalments from July 1.
Medicare Levy Thresholds – The income thresholds for the Medicare Levy will increase, reducing or eliminating the levy for lower-income earners. This aims to provide additional financial relief, particularly for individuals and families on modest incomes.
| Pensioners | ||
| Singles | $27,222 | $43,020 |
| Families | $45,907 | $59,886 |
| Plus per child | $4,216 |
Healthcare investments – Medicare bulk billing will be strengthened, with an $8.5 billion investment aiming to ensure that 9 out of 10 GP visits are bulk billed by the end of the decade. The Pharmaceutical Benefits Scheme (PBS) prescription cost will also be capped at $25 ($7.70 for concession cardholders).
HELP Debt Reduction – The government will reduce student debts under the Higher Education Loan Program (HELP) by 20%. This reduction will apply to approximately 3 million students, at a cost of $16 billion to the budget. This one-off discount aims to ease the financial burden on current and former students, enabling them to pay off their loans more quickly.
Non-Compete Clauses – Non-compete clauses will be banned for workers earning less than $175,000 annually, effective from 2027. This change aims to improve job mobility and wage growth by removing restrictions that limit workers’ opportunities. The government estimates this could add $5 billion to the economy and increase individual wages by up to $2,500.
It’s important to remember these measures are proposals only and may not become law.
Before making any financial decisions, we strongly recommend discussing your situation with a Modoras Accountant or Planner.
Our team is here to help you make informed decisions with clarity and confidence. Get in touch today.
