How to Maximise Your Tax Refund Legally in Australia
2025–26 Federal Budget: Key Measures That May Affect You
March 29, 2025 |
The 2025–26 Federal Budget delivered on 25 March 2025 includes several measures aimed at easing cost-of-living pressures, improving housing access, and reforming elements of the tax system. Below, we summarise the key updates that are most relevant to our clients, including individual taxpayers, property investors, and small businesses.
1. Personal Income Tax Cuts
The government has proposed further personal income tax cuts starting from 1 July 2026, with an additional cut from 1 July 2027. These are in addition to the already legislated tax reforms introduced in previous years.
Proposed Personal Income Tax Rates (Excluding Medicare Levy)
| Taxable Income | 2025–26 | 2026–27 | 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% |
| $190,001+ | 45% | 45% | 45% |
What this means for you:
Taxpayers earning between $18,201 and $45,000 will save up to $268 in 2026–27 and $536 from 2027–28. Most taxpayers earning above $45,000 will also benefit from a consistent $268 annual reduction.
2. Increased Medicare Levy Low-Income Thresholds
To help low-income Australians cope with living costs, the Medicare levy low-income thresholds have been raised.
2025 Medicare Levy Thresholds
| Taxpayer Category | 2024 | 2025 |
| Single Individual | $26,000 | $27,222 |
| Families (non-SAPTO) | $43,846 | $45,907 |
| Single (SAPTO-eligible) | $41,089 | $43,020 |
| Families (SAPTO-eligible) | $57,198 | $59,886 |
| Per Dependent Child/Student | +$4,027 | +$4,216 |
This measure ensures more Australians are exempt from the levy or pay a reduced amount.
3. Foreign Resident Capital Gains Tax Regime
To increase compliance and revenue from foreign investors, significant changes have been proposed (delayed until at least 1 October 2025):
- Broader asset types to be subject to CGT for foreign residents.
- 365-day testing for the principal asset test (vs. point-in-time).
- Notification to the ATO required for transactions exceeding $20 million.
Investors with foreign interests in Australian assets should start planning now, especially for commercial or large residential holdings.
4. Student Loan Changes
Big news for anyone with a HELP or other student loan:
- A 20% reduction in outstanding HELP and related debts (subject to legislation).
- The repayment threshold increases to $67,000 (up from $54,435) in 2025–26.
These changes are designed to ease the debt burden for younger Australians and professionals.
5. Energy Bill Relief
Eligible households and small businesses will receive two $75 rebates directly off their electricity bills between 1 July and 31 December 2025.
This builds on prior rebates and will assist over one million small businesses and all Australian households.
6. Expansion of Help to Buy Scheme
The Help to Buy Scheme allows the government to take an equity stake in your home purchase.
Key Updates:
| Criteria | Old Cap | New Cap |
| Individual income cap | $90,000 | $100,000 |
| Joint applicants or single parents | $120,000 | $160,000 |
Additionally, property price caps will be linked to average house prices in each state, improving accessibility.
7. Restriction on Foreign Ownership of Housing
To address housing shortages and increase local supply:
- Foreign persons (including companies and temporary residents) will be banned from buying established dwellings for 2 years from 1 April 2025.
- Exceptions apply for those increasing housing supply (e.g., build-to-rent).
The ATO will receive $14.6 million for enforcement and auditing of land banking practices.
Final Thoughts
While many of these changes offer cost-of-living support and housing access improvements, others aim to tighten regulation and tax compliance. It’s worth noting that some measures still require legislation, especially with an upcoming federal election.
👉 Need help navigating how this budget affects your finances, investments, or business? Contact Investax today to speak with one of our tax specialists.
We offer a 15-minute free consultation to discuss your tax, property investment and business needs. Book your complimentary consultation now.
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