“Modest” Two-Stage Personal Income Tax Cut
Starting on 1 July 2026 and again on 1 July 2027, the government will implement a modest tax cut for all taxpayers. For the tax bracket of $18,201 to $45,000, the tax rate will decrease from the current rate of 16% to 15% starting in July 2026, and then further reduce to 14% from 2027 to 2028. This initiative will cost $648 million over four years. Taxpayers in this bracket can expect a maximum saving of $268 in the 2026-27 financial year and $536 in the 2027-28 financial year.
Proposed Personal Income Tax Threshold
| Thresholds ($) | Rates in 2024–25 and 2025–26 (%) | Rates in 2026–27 (%) | Rates in 2027–28 (%) |
| 0 – 18,200 | Tax free | Tax free | Tax free |
| 18,201 – 45,000 | 16 | 15 | 14 |
| 45,001 – 135,000 | 30 | 30 | 30 |
| 135,001 – 190,000 | 37 | 37 | 37 |
| >190,000 | 45 | 45 | 45 |
Medicare Levy Thresholds Increased for Low-Income Earners
Under the Medicare levy low-income threshold, low-income earners are exempt from paying the levy. From 1 July 2024, the threshold for the exemption will be maximised. This means low-income earners will have to pay less when they file their income tax returns for 2024-25.
| 2024-25 | 2025-26 | |
| Singles | $26,000 | $27,222 |
| Families | $43,846 | $45,907 |
| Single seniors & pensioners | $41,089 | $43,020 |
| Family seniors & pensioners | $57,198 | $59,886 |
| Family additional child or student | $4,216 | $4,027 |
The changes to the threshold will incur a cost of $648 million over the next five years.
Announced $150 Energy Bill Relief
Small businesses and households will get an extra automatic credit of $150 on their energy bills in quarterly instalments between 1 July 2025 and 31 December 2025. The extension of energy bill rebates will cost $1.8 billion over two years.
Foreign Resident CGT Amendments Delayed
The changes regarding how foreign residents interact with the tax system were originally set to take effect on 1 July 2025, however, this date has now been postponed. The start date for the foreign resident Capital Gains Tax (CGT) amendments has been delayed to 1 October 2025, and it may be pushed back further depending on the progress of the reforms through Parliament.
These changes will expand the range of assets subject to CGT for foreign residents upon sale. They will also revise the rules that determine whether the sale of shares or units in a trust or company is liable for CGT. Additionally, foreign residents will be required to disclose transactions involving trusts or share interests valued at $20 million or more to the Australian Taxation Office (ATO) before they take place.
Announced 2-Year Ban on Foreign Ownership of Established Homes
Starting April 1, 2025, the Government prohibits foreign and temporary residents, as well as foreign-owned companies, from buying established properties to prevent ‘land banking.’ This restriction will last for two years but includes some specific exceptions.
Delays in MIT Amendments
The implementation of the management investment trust (MIT) withholding tax concession was originally set to start on 1 July 2025. However, it will now take effect on the first 1 January, 1 April, 1 July, or 1 October following the Act’s Royal Assent.
Additionally, the Government will update tax laws to clarify the arrangements for MITs, ensuring that legitimate investors can maintain access to reduced withholding rates. These changes will be effective for fund payments starting from 13 March 2025 and will align with the ATO’s heightened efforts to prevent misuse in this area.
‘Help To Buy’ Program Extended
The Government’s ‘Help to Buy’ program minimises the deposit amount to buy a home by providing an equity contribution. Under this scheme, Housing Australia offers eligible candidates a Commonwealth equity contribution of up to 30% of the purchase price of their current home and up to 40% of the purchase price of a new home. To qualify for this scheme, the income threshold for a single was $90,000 and, for joint candidates, $120,000. The budget increases this threshold to $100,000 and $160,000, respectively. Additional conditions apply. The program is not currently available to applicants.