The Australian Federal Budget for 2025–26 introduces several measures aimed at alleviating cost-of-living pressures and enhancing essential services. Below is an overview of the key initiatives:
Income Tax Cuts
The government has announced modest two-stage tax cuts to provide relief to taxpayers:
- From 1 July 2026: The tax rate for earnings between $18,201 and $45,000 will decrease from 16% to 15%, resulting in an annual saving of $268 for individuals earning above $45,000.
- From 1 July 2027: This rate will further reduce to 14%, doubling the annual savings to $536 for the same income bracket.
These tax cuts are projected to cost the government $17.1 billion and are designed to provide meaningful cost-of-living relief while addressing bracket creep.
Energy Bill Relief
To assist with rising energy costs, the budget includes an additional $150 in energy bill relief for all Australian households and approximately one million small businesses. This initiative extends support through the end of 2025, aiming to mitigate the impact of soaring energy prices.
Healthcare Investments
The government is making significant investments to strengthen Medicare and improve healthcare accessibility:
- Bulk Billing: A record $7.9 billion investment to enhance bulk billing, ensuring more Australians have access to free GP visits.
- Urgent Care Clinics: Funding to establish additional Urgent Care Clinics, with the goal of having 80% of Australians living within 20 minutes of such a facility.
- Cheaper Medicines: An allocation of $689 million over four years to reduce the cost of most medications listed on the Pharmaceutical Benefits Scheme (PBS). From 1 January 2026, the maximum cost of a script will decrease from $31.60 to $25, saving Australians a combined $200 million annually.
Support for First Home Buyers
The budget enhances the Help to Buy scheme by increasing income and property price caps:
- Income Caps: Raised from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for couples or single parents.
- Property Price Caps: Adjusted to reflect current market conditions across various regions.
This expansion allows more first home buyers to access up to a 40% government contribution towards their new home with a deposit as small as 2%.
Women’s Health Initiatives
An additional $240 million is allocated to establish 33 specialist clinics nationwide, focusing on conditions such as endometriosis, pelvic pain, perimenopause, and menopause. This funding builds upon the $573 million previously committed to women’s health initiatives.
Student Debt Reduction
The government will reduce student debts by 20% before indexation on 1 June 2025, effectively wiping $16 billion from outstanding student loans. This measure aims to alleviate the financial burden on graduates and make the student loan repayment system fairer.
Economic Outlook
The budget forecasts a deficit of $42.1 billion for 2025–26, an improvement of $4.8 billion since the Mid-Year Economic and Fiscal Outlook (MYEFO). Real GDP is projected to grow by 2.25%, and inflation is expected to average 3% during this period.
These measures reflect the government’s commitment to providing immediate cost-of-living relief while investing in long-term initiatives to support economic growth and public well-being.
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