The 2025/26 Federal Budget feels very much like an election budget, with a strong focus on cost-of-living relief and measures aimed at gaining voter support. While the big headline is undoubtedly the personal income tax cuts—promising savings of up to $268 in the 2026–27 year and up to $536 from 2027–28—it’s important to look beyond the surface.  

At the same time as rolling out these cuts, the Government has also committed nearly $1 billion to bolster tax compliance and crack down on tax avoidance. It’s a strategic mix of giving back to taxpayers while tightening the screws on those who bend the rules. Let’s break it down. 

Tax Relief for Individuals 

  • Starting 1 July 2026, the tax rate for those earning between $18,201 and $45,000 will drop from 16% to 15%, then further to 14% from 1 July 2027. 
  • This translates to a tax cut of up to $268 in 2027 and up to $536 in 2028. 
  • For high-income earners (over $190,000), the top marginal tax rate of 45% remains unchanged. 
  • These changes provide some relief, but it’s worth considering how they fit into your broader financial strategy. 

Energy Bill Relief 

  • Eligible households and small businesses will receive an additional $150 energy rebate, automatically credited to their electricity accounts (if you have an electricity account, you’re eligible). You don’t need to apply for the rebate—electricity providers will handle the process. 
  • The rebate will be delivered in two instalments of $75 each, with the first appearing on bills issued after 1 July 2025 and the second following in the subsequent quarter. 

Cheaper Medicine 

  • The Pharmaceutical Benefits Scheme (PBS) general co-payment will reduce to $25 for non-concession cardholders. 
  • This measure will help retirees and pensioners manage healthcare expenses, particularly those with ongoing medication needs. 

Strengthening Tax Integrity and Compliance 

  • The Government will invest $999 million over four years to extend and expand tax compliance activities, focusing on reducing tax avoidance and improving integrity in the tax system. 
  • Key initiatives include: 
  • Extending the Shadow Economy Compliance Program to crack down on worker exploitation, under-reporting of taxable income, and illicit activities that harm competition. 
  • Expanding the Personal Income Tax Compliance Program to enhance proactive and corrective actions in areas of non-compliance. 
  • Extending the Tax Integrity Program to ensure timely payment of tax and superannuation liabilities, particularly from medium and large businesses. 
  • Expanding the Tax Avoidance Taskforce for continued scrutiny on multinationals and wealthy individuals. 

Managed Investment Trusts 

  • Changes to tax laws will clarify arrangements for managed investment trusts, ensuring legitimate investors maintain access to concessional withholding tax rates. 
  • Additionally, the Government will defer the start date of the clean building managed investment trust withholding tax concession to align with energy efficiency standards. 

More Affordable Childcare 

  • Families will now be eligible for a minimum of 72 hours per fortnight (three days per week) of subsidised childcare without needing to meet an activity test. 
  • This move supports working parents and caregivers, making childcare more accessible and affordable. 

Student Debt Relief 

  • HELP and other student debts will be reduced by 20%, easing the financial burden on graduates. 
  • Additionally, the repayment threshold will increase from $54,435 to $67,000 from the 2026 income year, allowing graduates to keep more of their income as they establish their careers. 

Expanding the ‘Help to Buy’ Program 

  • Higher income and property price caps mean more Australians can take advantage of government support to enter the property market. 
  • The scheme will offer an equity contribution of up to 40%, reducing the deposit size and mortgage load. 

What Does It All Mean?

The budget contains some welcome changes for many of our clients—particularly business owners, homeowners, retirees, and families. While there’s cost-of-living relief and support for entering the housing market, there are also significant compliance and integrity measures that will impact high-net-worth individuals and larger businesses. As always, it’s important to stay informed and assess how these updates align with your financial plans. 

And finally, something that might bring a smile to your face — from August, the excise on beer will be frozen for two years! Cheers to that! 

Got questions about how these changes impact your financial strategy? Book a call.