Australia's 2025-26 Federal Budget: Key Highlights

On March 25, 2025, Treasurer Jim Chalmers delivered the Australia Government's 2025-26 Federal Budget. Labour's fourth Budget aimed to balance cost-of-living relief with economic stability, while making strategic investments in the key areas such as healthcare by strengthening Medicare, educational initiatives, and infrastructure. Below is an overview of the major initiatives an their potential impacts.

💰 Tax Relief and Economic Measures

• Personal Tax Cuts: The budget introduces a $17 billion tax cut for all taxpayers, effective from the 2026–27 financial year. Individuals earning between $18,201 and $45,000 will see their tax rate reduced from 16% to 15%, with a further reduction to 14% in 2027–28. This change is expected to reduce the tax bill for the average taxpayer in this bracket by $268 in 2026–27, increasing to $536 in 2027–28.

• Student Debt Relief: The government plans to cut student debt by 20%, reducing a combined $19 billion for over 3 million Australians, ensuring fairness in the student loan repayment process. The minimum salary will also increase from $54,435 in 2024 to $67,000 in 2025-26 before people are required to commence repayments.

  
  

🏥 Healthcare Investments

• Subsidised Medicines: The budget allocates $784.6 billion to make Pharmaceutical Benefits Scheme (PBS) scripts cost a maximum of $25 and to subsidise new and affordable medicines with an investment of $1.8 billion.

• General Practice Funding: A $7.9 billion investment aims to make nine out of ten visits to the GP bulk billed by 2030 for 4,800 bulk-billed GPs.

• Emergency Care Clinics: The government plans to provide $644 million to fund the creation of an additional 50 Medicare urgent care clinics.

  
  

🏠 Housing and Infrastructure

• Housing Australia Future Fund: The budget includes provisions for delivering 18,000 homes under rounds one and two of the Housing Australia Future Fund.

• Affordable Housing Initiatives: The government will ban foreign buyers from purchasing existing houses for up to two years from April 1, 2025, to address housing affordability. Eligible Australian households and small businesses will also receive an energy rebate of $150.

• 'Help to Buy' Program: The government will aim to expand the 'Help to Buy' program, contributing around $800 million in supporting Australians to achieving homeownership through lower deposits, smaller mortgages, and equity contributions of up to 40%.

• Infrastructure Investments: A total of $17.1 billion is allocated for infrastructure projects across Australia.

  
  

👶 Early Childhood Education

• Universal Access: The budget allocates $5 billion towards delivering a universal early childhood education and care system.

• Subsidised Childcare: All Australian families with a combined income of less than $530,000 a year will get access to three days a week of subsidised childcare, at a cost to the budget of $426.6 million.

  
  

🏥 Aged Care and Disability Support

• Aged Care Workforce: The government plans to deliver $2.6 billion to increase award wages of aged care nurses.

• Disability Support: An investment of $432.8 million is allocated to assist people with a disability.

  
  

🛡️ Defence and National Security

• Defence Spending: The budget includes $330 billion to support the Australian Defence Force.

• National Security Initiatives: The government plans to spend $1.2 billion to respond to the aftermath of Cyclone Alfred.

  
  

🔮 Economic Outlook

• Deficit Forecast: The deficit for 2025–26 is projected to be $42.1 billion, an improvement of $4.8 billion since the Mid-Year Economic and Fiscal Outlook (MYEFO).

• Debt Per Capita: Australia's combined federal, state, and territory government debt is projected to rise to over $1.2 trillion in the next financial year, translating to net debt per capita of approximately $45,183.

The 2025–26 Federal Budget reflects the government's commitment to addressing key issues such as cost-of-living pressures, healthcare accessibility, and housing affordability. While the projected deficit remains a concern, the strategic investments outlined in the budget aim to foster long-term economic stability and social equity.