Ever feel like you’re paying more tax than you should, but you’re not quite sure why?
You’re not alone.
And if you’re not paying attention to the latest Federal Budget, you might just keep handing over more of your hard-earned money than necessary.
This year’s Budget, handed down on 25 March 2025, is packed with tax updates that could make or break your next return. Whether you’re an employee, a small business owner, or someone still wrestling with student loans, there’s something in here that will hit your hip pocket, one way or another.
So, let’s unpack it. Because what you don’t know can hurt your wallet.
First, the Good News: Tax Cuts Are Coming
If you have ever looked at your payslip and thought, ‘Where’s the rest of it?’, here’s something to smile about.
From 1 July 2026, the tax rate for those earning between $18,200 and $45,000 drops from 16% to 15%. Then, it drops again to 14% in 2027.
Sure, it might not sound life-changing, $5 a week in 2026 and $10 a week in 2027. But add it up and you’re looking at up to $536 back in your pocket by 2027. And that’s just the beginning.
When combined with the already-legislated Stage 3 tax cuts kicking in from 2024-25, the average Aussie earning around $79,000 a year could see a total tax cut of $2,190 by 2027-28. That’s roughly $50 a week, not exactly pocket change, right?
But if you’re not adjusting your tax planning, you could be missing out on the benefits.
But Don’t Celebrate Just Yet
While individual tax rates are getting a trim in the 2025 Federal Budget, the ATO isn’t sitting idle. In fact, they’re getting a hefty $1 billion boost to step up their compliance game.
Yep, that means more eyes on you, especially if you’re running a business, claiming deductions, or operating in cash-heavy industries.
Ask yourself this: if the ATO came knocking tomorrow, would you be 100% confident in your records?
They are expanding task forces, cracking down on the shadow economy, and investing in programs to track non-compliance. So, if you’ve been a bit “creative” with your expenses or haven’t kept those receipts in order… now’s the time to clean up.
Write-Offs Still Live (But Not for Long)
Now, let’s talk to the tradies, café owners, freelancers, and every Aussie with an ABN.
The instant asset write-off—that handy deduction that lets you instantly claim eligible business purchases—was set to shrink from $20,000 to just $1,000 on 1 July 2025. That’s a massive drop that could slam your cash flow.
But the government has extended the $20,000 threshold for another year. You’ve got until the end of the 2025–26 financial year to make your moves, assuming the legislation passes.
So, ask yourself: what assets does your business actually need? Now might be the smartest time to invest before the window slams shut.
Cost-of-Living Relief
Energy bills got you sweating more than the summer heat?
You’re not alone, and the government knows it. That’s why they’re handing out $150 in energy bill relief for individuals and small businesses this year, with two more $75 instalments coming after 1 July 2025.
It’s not going to solve all your cost-of-living woes, but hey, $150 less on your power bill means more money to spend where it actually counts.
Struggling With Student Debt? Here’s Some Real Relief
If you’re one of the 3 million Australians still carrying a HECS/HELP debt, here’s a breath of fresh air.
As part of the 2025 Federal Budget, there’s a one-time 20% reduction in student loan balances coming before indexation hits on 1 June 2025. That could wipe out a good chunk of your debt—poof, gone. Combined with ongoing caps on indexation and a new repayment system based on marginal tax rates, it’s a long-overdue overhaul.
Let’s be honest—student loans were never meant to feel like a mortgage. These reforms? A step in the right direction.
Don’t Overlook the Medicare Levy Threshold Changes
If you’re a low-income earner, there’s a quiet but important win here.
The Medicare levy low-income thresholds have been bumped up for singles, couples, and pensioners. That means you could end up paying less or even nothing in the Medicare levy if you fall below the new limits.
Again, this only works in your favour if you’re tracking your income and lodging correctly. If you’re not sure where you stand, now’s the time to get some clarity.
And What About Super?
No surprises here—the Superannuation Guarantee rate is going up from 11.5% to 12% on 1 July 2025, right on schedule.
It’s great for your retirement savings, but here’s the thing: if you’re an employer, you’ll need to budget for this. And if you’re an employee, don’t just assume your take-home pay will stay the same.
Check your employment agreement to see whether your super is paid on top of or included in your salary package.
So, What Should You Do Now?
Here’s the honest truth: These tax changes aren’t just numbers on a spreadsheet. They affect your pay, your business, your energy bills, your student debt, and your life.
But none of this helps if you don’t act on it.
If you’re thinking, “I’ll deal with this later,” just know that ‘later’ could mean missing out on deductions, paying more than you need to, or ending up in hot water with the ATO.
So the big question is: Are you ready for the 2025-26 financial year?
Whether it’s reviewing your PAYG, planning your business purchases, or finally getting on top of your HELP debt, it pays to be proactive.
Because when it comes to your money, ignorance isn’t bliss. It’s expensive.
Disclaimer: This website is designed for informational and educational purposes. Although we exert diligent efforts to maintain the accuracy and reliability of the content, we must disclaim liability for any errors, omissions, or inaccuracies. The content provided is “as is” and is not accompanied by warranties, whether expressed or implied. It should not serve as the sole basis for financial or legal decisions.
Given the evolving nature of financial regulations and conditions, the accuracy and reliability of information may change over time. Users are urged to exercise due diligence and consult with a qualified financial professional for personalised advice. ‘Clear Tax Accountants’ bears no responsibility for direct or indirect consequences, encompassing financial loss or legal matters stemming from the use or misuse of the information on this website.
Please be aware that the information, by no means, is a substitute for financial advice.
