28 Mar What the 2025 Federal Budget Means for You

What the 2025 Federal Budget Means for You

The Federal Budget released on 25 March 2025 includes a range of measures aimed at easing cost-of-living pressures, supporting working families, encouraging home ownership, and improving healthcare access. While many of these announcements are not yet law, they provide a clear indication of the Government’s direction and may impact your financial strategy moving forward.

Below, I’ve broken down the key measures most relevant to you.

1. Personal Income Tax Cuts – More in Your Pocket

From 1 July 2026, the Government will reduce the lowest marginal tax rate from 16% to 15%, followed by a further cut to 14% from 1 July 2027 for incomes between $18,201 and $45,000.

What this means:

If you’re earning $45,000 or more, the tax saving will be:

• $268 in 2026–27
• $536 from 2027–28 onwards

For example, if your household income is $200,000 combined and one partner earns under $45,000, these cuts could mean a few hundred dollars extra each year—helpful for saving, investing, or reducing debt.

Planning tip: If you’re in the lower tax brackets, it may make concessional super contributions (like salary sacrifice) slightly less tax-effective, and alternative contribution strategies such as non-concessional or spouse contributions might warrant consideration.

2. Medicare Levy Low-Income Thresholds Increased

From 1 July 2024, the Medicare levy low-income thresholds will rise:

• Single: $27,222 (up from $26,000)
• Family: $45,907 (up from $43,846)
• Seniors and pensioners: $43,020 for singles, $59,886 for couples
• Additional $4,216 per dependent child

Why this matters: If your taxable income is close to these thresholds, you may now avoid the 2% Medicare levy, providing modest relief.

3. Childcare – A Game-Changer for Working Families

From January 2026, every family will be guaranteed at least 3 days (72 hours per fortnight) of subsidised early childhood education and care (ECEC), regardless of how much paid work or study you do.

Example:

A client couple earning $90,000 with one child previously qualified for 36 hours a fortnight. They will now be entitled to 72 hours—effectively saving $11,400 per year in childcare fees, based on average rates.

This is a massive win for families juggling work and parenting, especially where one partner works part-time or casually.

4. Energy Bill Relief – Modest but Welcome

From 1 July to 31 December 2025, eligible households and small businesses will receive two quarterly rebates of $75, totalling $150 off electricity bills.

While not huge, every bit helps when juggling mortgage repayments, school costs, and rising expenses.

5. Cheaper Medicines – Helping with Health Costs

From 1 January 2026, the general co-payment for PBS medicines will drop from $31.60 to $25.00.

This can mean significant savings for families with ongoing prescription needs, particularly if you don’t hold a concession card.

6. Support for Apprentices and Construction Jobs

From 1 July 2025:

• Apprentices in housing construction trades will be eligible for up to $10,000 in support during their training.
• Employers hiring these apprentices can receive up to $5,000.

This will help ease the skills shortage in trades and may be relevant if you or your children are exploring career options or hiring apprentices.

7. Student Loans – Fairer Repayments and Reduced Debt

This Budget includes some significant changes:

• HELP debts will be cut by 20% before indexation on 1 June 2025. A graduate with an average $27,600 debt could see a $5,520 reduction.
• From 1 July 2025, repayments will only apply on income above $67,000, up from $54,435.

This gives more breathing room to younger clients or adult children still paying off student loans.

8. Housing Measures – Foreign Buyer Ban and Shared Equity

Two key announcements:

• A ban on foreign ownership of established homes for 2 years from 1 April 2025.
• Expanded eligibility for the Help to Buy scheme with higher income and property caps. For example, in Sydney, the price cap for eligible homes rises from $950,000 to $1.3 million.

This may help more Australians—especially first-home buyers—enter the property market.

9. Superannuation – Contribution Opportunities and Indexation

Key changes:

• The Superannuation Guarantee (SG) rises to 12% from 1 July 2025.
• The Transfer Balance Cap (TBC) will rise to $2 million from 1 July 2025.

Why this matters:

• If your salary is $100,000, your employer will contribute $12,000 in SG from 2025–26. If you’re also making salary sacrifice contributions, check that you stay under your $30,000 concessional cap.
• The increase in the TBC may allow more retirees to move funds into tax-free pension phase, and potentially make non-concessional contributions even if they were previously ineligible.

10. Aged Care – Investment in Workforce and Reforms

Additional funding is being provided to:

• Implement aged care reforms
• Fund wage increases for nurses and support workers
• Improve digital systems and culturally appropriate assessments for First Nations people

While these changes are largely administrative, they help support quality and accessibility of aged care—especially relevant if you’re caring for ageing parents or planning for your own later years.

Final Thoughts

The 2025 Budget delivers moderate but broad-based relief, particularly for working families, young professionals, and those dealing with rising household costs. As always, most proposals are not yet law, but they can inform planning decisions, especially around super contributions, family cashflow, childcare planning, and student debt repayment strategies.

If you’d like to discuss how these changes could impact your financial strategy or need help planning around these updates, feel free to reach out.

Important information and disclaimer

The information provided in this document is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide.

FinPeak Advisers ABN 20 412 206 738 is a Corporate Authorised Representative No. 1249766 of Spark Advisers Australia Pty Ltd ABN 34 122 486 935 AFSL No. 458254 (a subsidiary of Spark FG ABN 15 621 553 786)