2025 Australian Budget Breakdown: Key Tax Measures for Individuals and Small Businesses

Key takeaways: What This Means for You
For Individuals:
✅ Lower Medicare levy for low-income earners.
✅ Tax cuts from 2026, improving take-home pay.
✅ Potential 20% HECS/HELP debt reduction (if legislated).
For Small Businesses:
✅ Extended $20k instant asset write-off (until June 2026).
⚠️ ATO crackdown on shadow economy & tax avoidance.
✅ Franchise protections & support against unfair contracts.
For Investors & Property Buyers:
🚫 Foreign buyer ban on existing homes (focus on new builds).
🏡 Government incentives for affordable housing projects.
 
The 2025-26 Federal Budget has introduced several significant tax measures aimed at providing cost-of-living relief for individuals and supporting small businesses. Here’s a breakdown of the key tax implications from the 2025 Budget.


1. Personal Income Tax Cuts
Medicare Levy Low-Income Threshold Increase

• The Medicare levy low-income thresholds will rise from 1 July 2024, ensuring more low-income earners remain exempt or pay a reduced levy.
  • Singles: Threshold increases from $26,000 to $27,222.
  • Families: Threshold increases from $43,846 to $45,907.
  • Seniors & Pensioners: Singles threshold rises from $41,089 to $43,020, and family thresholds increase from $57,198 to $59,886.
• Estimated impact: A $648 million reduction in receipts over five years.

New Tax Cuts from 2026

• From 1 July 2026, the 16% tax rate will drop to 15%.
• From 1 July 2027, it will further reduce to 14%.
• Estimated impact: A $17.1 billion reduction in receipts over five years.

One-Time 20% Reduction in HECS/HELP Debt (Subject to Legislative Approval)

• Proposed measure: A one-time 20% reduction in outstanding HECS/HELP loan balances.
• Eligibility: Likely to apply to all current debt holders (final details pending legislation).
• Purpose: Ease financial pressure on graduates amid rising education costs.

Takeaway for taxpayers:

• Lower-income earners will see immediate relief via the Medicare levy adjustment.
• Middle-income earners will benefit from the phased tax cuts starting in 2026.
• Graduates with student debt could see significant savings if the HECS/HELP reduction passes.

2. Small Business & Tax Integrity Measures
Extended Instant Asset Write-Off (Until 30 June 2026)

• $20,000 instant asset write-off extended for another year (FY25 & FY26).
• Applies to: Small businesses with aggregated turnover below $10 million.
• Eligible assets: Equipment, machinery, vehicles, and tech investments.
• Goal: Encourage business investment and cash flow support.

Enhanced Tax Practitioner Regulation

• The Tax Practitioners Board (TPB) will receive $27.4 million over four years to strengthen compliance and regulation.
• Focuses on high-risk tax practitioners to prevent misconduct and poor tax advice.

Tax Avoidance Taskforce & Shadow Economy Crackdown

• $999 million allocated to the ATO to extend and expand:
  • Multinational tax compliance (Tax Avoidance Taskforce).
  • Shadow Economy Compliance Program (targeting underreported income, illicit tobacco, and worker exploitation).
  • Personal Income Tax Compliance Program (targeting individual tax non-compliance).
• Estimated revenue gain: $3.2 billion over five years.

Small Business Support

• $12 million for franchisee protections and anti-phoenixing measures.
• $7.1 million for stronger Franchising Code of Conduct enforcement.

Takeaway for small businesses:

• Extended instant write-off allows faster tax deductions on asset purchases.
• Expect tighter ATO scrutiny on tax compliance, especially cash transactions.
• Franchisees gain better regulatory protections against unfair practices.

3. Housing & Foreign Investment Restrictions
Ban on Foreign Ownership of Established Homes

• From 1 April 2025, foreign buyers (including temporary residents) will be banned from purchasing existing homes for two years.
• Exceptions apply for investments that increase housing supply (e.g., build-to-rent projects).
• ATO enforcement: $5.7 million for compliance.

Housing Support & Prefabricated Construction Incentives

• $54 million to boost modular and prefabricated housing.
• Home Guarantee Scheme extended, helping first-home buyers with low deposits.

Takeaway for investors:

• Foreign buyers must focus on new developments rather than existing properties.
• Small builders may benefit from government-backed prefab housing incentives.

4. Industry-Specific Tax Incentives
Hospitality & Alcohol Producers

• Draught beer excise freeze (no indexation until August 2027).
• Excise remission cap increases for brewers, distillers, and wine producers (from $350,000 to $400,000 per year).
• Estimated cost: $165 million in reduced receipts.

Philanthropy & DGR Listings

• New Deductible Gift Recipient (DGR) listings for charities like Equality Australia and Community Foundations Australia.

Takeaway for businesses:

• Pubs, breweries, and wineries get cost relief via excise changes.
• Charities gain more fundraising flexibility with expanded DGR status.

The 2025 Budget delivers relief for households, support for small businesses, and student debt assistance, but also tightens tax compliance. If you need help navigating these changes, consult us to optimise your tax strategy.


Need personalised tax advice? Contact us today to discuss how these changes impact on your finances.
📞 Call us or book a consultation to stay ahead of the 2025 tax reforms!


Would you like a deeper dive into any specific measure? Let me know in the comments! #AusBudget2025 #TaxReform #SmallBusiness