Key takeaways from the 2025-26 Australian Federal Budget for individuals:
$75.7m
Additional funding over the next four years to extend and expand the ATO’s ‘Personal Income Tax Compliance Program’.
$1.8b
The Government has announced additional cost of living relief assistance with the extension of the energy bill rebates
New personal tax rates for the 2027 and 2028 financial years
From 1 July 2026, the Government proposes further tax cuts to Australian individuals to assist with cost-of living pressures and mitigate bracket creep.
The proposed tax cuts result in:
- A reduction to the 16% tax rate to 15% from 1 July 2026
- A reduction to the 15% tax rate to 14% from 1 July 2027
The tax rates for the 2026/27 and 2027/28 financial year compared to the 2025/26 financial year are as follows
|
Taxable Income $ |
Rates in 2025/26 | Rates in 2026/27 | Rates in 2027/28 |
| 0 to 18,200 | Tax free | Tax free | Tax free |
| 18,201 to 45,000 | 16% | 15% | 14% |
| 45,001 to 135,000 | 30% | 30% | 30% |
| 135,001 to 190,000 | 37% | 37% | 37% |
| > 190,000 | 45% | 45% | 45% |
Medicare levy low-income thresholds
The Medicare levy low-income threshold will increase from 1 July 2024 for singles, families, seniors and pensioners.
More than 1 million Australians on lower incomes will continue to be exempt from the Medicare levy or continue to pay a reduced levy rate, under this cost‑of‑living measure.
The new thresholds are listed below:
| 2023/2024 | 2024/2025 | |
| Singles | $26,000 | $27,222 |
| Families | $43,846 | $45,907 |
| Single seniors and pensioners | $41,089 | $43,020 |
| Family seniors and pensioners | $57,198 | $59,887 |
The family income thresholds will increase by $4,216 for each dependent child or student, up from $4,027.
Additional ATO funding targeting personal income tax compliance
The Government has announced additional funding of $75.7m over the next four years from 1 July 2025 to extend and expand the Australian Taxation Office’s ‘Personal Income Tax Compliance Program’. This adds even further resources to combat key areas of non-compliance.
The ATO’s areas of focus may include excessive or unusual work-related deductions, income not reported from the ‘gig’ economy and rental property expenses.
Cost of living assistance with the extension of the Energy Bill Relief Fund
The Government has announced the continuation of energy bill rebates with a further $1.8 billion of funding. This will provide bill rebates of $75 per quarter for eligible Australian households and small businesses until 31 December 2025 as part of the Government’s cost-of-living relief measures.
Restricting foreign ownership of housing
As previously announced on 16 February 2025, foreign persons (including temporary residents and foreign-owned companies) will be temporarily banned from 1 April 2025 for two years from purchasing established dwellings in Australia, unless an exception applies.
Exceptions to the ban will include investments that significantly increase housing supply or support the availability of housing on a commercial scale and purchases by foreign owned companies to provide housing for workers in certain circumstances.
This measure supports the Government’s broader agenda to boost Australia’s housing supply, allowing Australians to buy homes that would have otherwise been bought by foreign persons, while encouraging foreign persons to boost Australia’s housing supply. The ATO will be provided with an additional $5.7m to enforce this ban.
Also, additional ATO and Treasury funding will be provided to target land banking. This is to ensure foreign investors comply with requirements to put vacant land to use for residential and commercial developments within reasonable timeframes.
Housing support measures
The Government has announced several housing support measures intended to make it easier for Australians to buy and rent a home. These include:
─ A national plan to build 1.2 million new homes over the next five years using the National Housing Accord to create efficient planning and zoning systems
─ Investing $54 million to accelerate the uptake of modern prefabricated and modular construction methods
─ Committing $800 million to expand the ‘Help To Buy’ scheme which will support around 40,000 Australian households buy a home with a lower deposit and smaller mortgage
─ Banning foreign buyers from purchasing existing homes for a two-year period from 1 April 2025 to suppress upward pressure on prices
─ Providing $9.3 billion to states and territories to combat homelessness and maintain social housing
─ Providing increased incentive payments of $10,000 to eligible housing construction apprentices from 1 July 2025 in a bid to increase the construction workforce
Access to cheaper medicines
The Government will lower the Pharmaceutical Benefits Scheme (PBS) general patient co‑payment from $31.60 to $25.00 on 1 January 2026 for people with a Medicare card and no Commonwealth concession card. The concessional co-payment remains frozen at its current level of $7.70 until 2029.
The Government will also provide funding for new and amended listings on the PBS, as well improving access to medicines and to trial an expansion of the range of services delivered by community pharmacies.
Cutting student debt
The Government is reforming the student loan repayment system announcing a reduction to outstanding Higher Education Loan Program (HELP) and other student debts by 20%, subject to the passage of legislation. This is in addition to the previous reforms to indexation which limit future indexation and retrospectively reducing the indexation applied in the 2023 and 2024 years.
The Government will also increase the repayment income threshold of $54,435 in 2024/25 to $67,000 in 2025/26.
