The Federal Budget for 2025–26, handed down by Treasurer Jim Chalmers on 25 March 2025, puts a strong emphasis on easing cost-of-living pressures and delivering targeted support to individuals and businesses. 

As we approach an election, many of the measures are designed to deliver practical benefits without introducing sweeping changes. 

For small business owners, investors, property owners, and general taxpayers, several announcements stand out for their direct impact.

Personal Tax Changes

One of the biggest takeaways is the broad-based income tax cuts set to begin from 1 July 2026. The lowest income tax rate will reduce from 16% to 15%, with a further drop to 14% from 1 July 2027. 

These adjustments will increase take-home pay for all workers earning above the tax-free threshold. A worker on an average salary could see around $268 more in 2026–27, and up to $536 each year from 2027–28.

The Medicare levy low-income thresholds will also be increased by 4.7% from 1 July 2024. This change ensures that those on lower incomes remain exempt or pay less of the 2% levy, offering some breathing room amid rising household costs.

Business Incentives and Support

Small businesses are likely to feel a shift with the ending of the instant asset write-off. The current $20,000 threshold will expire on 30 June 2025, reverting to just $1,000 from the new financial year. For businesses planning to invest in equipment or vehicles, there is a clear incentive to act before this change takes effect.

To help offset rising operating costs, around one million small businesses will receive $150 in energy bill relief in late 2025. The payment will be automatically credited through power bills, offering some modest financial support without any administrative burden.

Other measures include the proposed ban on non-compete clauses for workers earning under $175,000. This could make it easier for small businesses to attract experienced employees. Meanwhile, an extra $20 million will go towards encouraging the procurement of Australian-made goods, potentially benefiting local suppliers and manufacturers.

The government is continuing to support hospitality and manufacturing through alcohol excise reforms and funding for fee-free TAFE training in selected trades, helping address skill shortages and cost pressures.

Property Market Measures

The housing sector features prominently in this year’s budget. A $3 billion “New Homes Bonus” will be available to state and territory governments to encourage new housing supply. This could lead to increased construction activity and may relieve some pressure in tight rental and purchase markets.

The Help to Buy scheme has been expanded to assist more first-home buyers, thanks to higher income and property price thresholds. With the government taking an equity stake in properties, this initiative can support more Australians entering the housing market, which could lead to stronger demand in affordable property segments.

From 1 April 2025, foreign non-residents will be temporarily banned from buying existing residential properties for two years. This measure is intended to ease demand in established housing markets, giving local buyers greater opportunity to secure homes.

Further support is being provided through extended regional and family-focused home guarantees and increased funding to boost social and affordable housing. Renters will also benefit from higher Commonwealth Rent Assistance rates.

Superannuation and Retirement Savings

The government is moving ahead with plans to introduce an additional 15% tax on earnings for superannuation balances above $3 million. This change, due to begin on 1 July 2025, targets only a small group of high net-worth individuals. 

Those affected may want to consider strategies in response before the new financial year begins.

Employers will also need to prepare for changes to super payment frequency. From 1 July 2026, super contributions will need to be made at the same time as wage payments. This change, often called “payday super,” is designed to improve retirement outcomes and reduce unpaid super across the workforce. 

Small businesses should begin thinking about how to adjust their payroll systems to meet this new requirement.

There are no changes to contribution caps or pension rules in this budget, offering continued stability for most Australians planning for retirement.

Cost-of-Living Relief

Households will benefit from an additional $150 in energy bill credits, delivered in two instalments by the end of 2025. When combined with previously announced rebates, many households will receive a total of $450 in power bill support.

Another major announcement is the one-off 20% reduction in outstanding student loans (HECS-HELP). This will ease financial pressure for millions of Australians, particularly younger earners, and allow for greater financial flexibility in their early careers. The minimum repayment income threshold is also increasing to $67,000, giving graduates more breathing space before they are required to repay loans.

From January 2026, the cost of many prescription medicines will reduce, with the PBS co-payment falling from $31.60 to $25. Bulk-billing incentives and Medicare co-payment indexation freezes will make accessing healthcare more affordable.

ATO Compliance and Enforcement

The Australian Taxation Office will receive close to $1 billion to extend its compliance programs. This will focus heavily on large corporations and multinationals, but a significant portion is allocated to cracking down on the shadow economy – including undeclared income and off-the-books transactions.

Small and medium businesses should be aware that the ATO will be stepping up its efforts in reviewing GST, PAYG withholding, super payments, and tax lodgements. This funding boost means there will be more audits, more checks, and more enforcement activity in the years ahead.

Efforts to stop illegal phoenix activity are also gaining momentum, with additional investment in ASIC and the Director ID regime. This is aimed at stopping directors from escaping debts by shutting down and restarting companies under new names.

The Tax Practitioners Board will also receive funding to investigate misconduct among registered agents and advisors, reinforcing the message that tax compliance is front and centre for the government.

Key Takeaways on the Federal Budget 2025

The 2025 Federal Budget takes a targeted approach, delivering a combination of modest relief measures and long-term structural changes. 

For small businesses and investors, the coming year offers opportunities to take advantage of tax savings and incentives while preparing for regulatory changes. 

Now is a good time to review your plans and ensure your systems and strategies are aligned with these updates. 

At Box Advisory Services, we’re here to help you make sense of what these changes mean for your unique circumstances and guide you through the road ahead.