Your 2025 Tax Time Toolkit: Smart Tips for Everyday Australians

As we approach the end of the financial year, it’s more important than ever to make your money work smarter—not harder. With rising living costs, interest rates, and insurance premiums still biting, many Australians are feeling the pressure.

This tax time toolkit is here to help. Whether you’re a salaried worker, investor, or simply want to reduce your tax bill, this guide from Investax Group offers practical tips to boost your cash flow and stay ahead of your obligations.

After reading this guide, if you feel your situation could benefit from tailored tax advice before June 30, don’t hesitate to reach out to our expert team at Investax. Let’s get started.

Tax Strategies to Reduce Your 2025 Tax Bill

With the Stage 3 tax cuts now in effect from 1 July 2024, many individual taxpayers are expecting a lower tax bill when they lodge their 2025 tax return. These tax cuts mark a significant shift in Australia’s marginal tax rates, aiming to simplify the system and offer relief to middle-income earners.

To help you understand how your income will be taxed this year, we’ve included a comparison of the old and new marginal tax rates below.

Australian resident individual income tax rates:  

2024 income year		From the 2025 income year
Tax rate	Thresholds	Tax rate	Thresholds
0%	$0 – $18,200	0%	$0 – $18,200
19%	$18,201 – $45,000	16%	$18,201 – $45,000
32.5%	$45,001 – $120,000	30%	$45,001 – $135,000
37%	$120,001 – $180,000	37%	$135,001 – $190,000
45%	$180,001+	45%	$190,001+

Now that you’re across the 2025 tax rates, let’s dive into some practical tax planning strategies to help you make the most of this financial year.

Work-from-Home Deductions in 2025

If you’ve worked from home during the 2025 financial year, you can claim 70 cents per hour for additional running expenses like electricity, internet, phone, and stationery using the ATO’s fixed rate method. To use this method, you must keep a detailed record of your actual hours worked from home—estimates are not accepted.

For a comprehensive guide on what you can and can’t claim, visit our detailed article:
🔗 Work-from-Home Deductions – What You Can Claim in 2025 and How

Slash Your 2025 Tax Bill with Income Protection

The only type of personal insurance that’s tax-deductible for employees is income protection. If you’re a high-income earner in the top tax bracket, you could effectively get this insurance at nearly half the cost after tax deductions.

It helps replace your income if you’re unable to work due to illness or injury—and if you pay the premium before 30 June, the full amount is deductible against your wages.

Note: If your super fund pays for the premium, it’s not deductible under your name.

Boost Your Super and Cut Tax in 2025

The ATO has made it simpler in recent years to make personal, tax-deductible super contributions—and in 2025, it remains one of the most effective ways to reduce your tax bill. You no longer need to go through your payroll for salary sacrificing. Instead, you can contribute directly to your super account and claim a deduction yourself.

For example, if your employer has already contributed $20,000 to your super under the Super Guarantee, and you have some extra cash, you can top it up with a personal contribution—say $7,500—and claim that amount as a deduction on your 2025 tax return. Just remember to lodge a Notice of Intent form to claim a deduction with your fund first.

Note: As of 1 July 2024, the concessional contributions cap is now $30,000 per person for the 2024–25 financial year.

Maximise Your Super in 2025 with Carry-Forward Contributions

Not everyone realises that the ATO allows you to catch up on missed super contributions—and 2025 might be your best opportunity yet. If your total super balance was under $500,000 as of 30 June 2024, you may be eligible to carry forward unused concessional contribution caps from the past five financial years.

This means you can go beyond the standard $30,000 cap in 2025 by using leftover amounts from previous years—starting from the 2018–19 financial year. These unused amounts expire after five years, so any cap left over from 2019–20 must be used by 30 June 2025, or it will be lost for good.

Note: The ATO applies the oldest unused cap amounts first. So if you have leftover cap space from multiple years, your 2019–20 unused contributions will be used before anything from 2020–21.

Avoid the Medicare Levy Surcharge in 2025 with Private Health Cover

If your income exceeds the Medicare Levy Surcharge (MLS) threshold in 2025, it’s wise to take out private health insurance to avoid paying the extra tax. For many Australians, especially higher-income earners, the cost of basic hospital cover is often lower than the surcharge itself.

We frequently see taxpayers—and sometimes their accountants—make the mistake of incorrectly claiming a full exemption in the M2 section of their tax return, even when they didn’t have the required level of cover. The ATO usually picks this up years later, leading to unexpected tax bills and penalties.

To avoid this, always check your private health insurance status and ensure it meets the minimum MLS requirements. We’ve included the 2025 income thresholds for the Medicare Levy Surcharge below to help you assess your position.

Note – 

MLS income thresholds and rates for 2024–25
Threshold	Base tier	Tier 1	Tier 2	Tier 3
Single threshold	$97,000 or less	$97,001 – $113,000	$113,001 – $151,000	$151,001 or more
Family threshold	$194,000 or less	$194,001 – $226,000	$226,001 – $302,000	$302,001 or more
Medicare levy surcharge	0%	1%	1.25%	1.5%

Use Investment Losses Wisely in 2025 to Offset Capital Gains

If you’re planning to sell shares or other investments in 2025, it’s smart to review your portfolio first. Selling investments that are currently in a loss position can help reduce your capital gains tax bill. That’s because capital losses can only offset capital gains—not other types of income like salary or rental income.

Capital losses you incur in the 2024–25 financial year can be carried forward to future years if you don’t have any gains to offset this year. For example, if you record a capital loss now and then sell another investment at a gain next financial year, the carried-forward loss will reduce your future tax bill.

Make Your 2025 Tax Return Count with Charitable Donations

Giving back feels good—and in 2025, it can also be a smart tax move. Donations to Deductible Gift Recipient (DGR) organisations are tax-deductible, meaning they can reduce your taxable income while supporting a worthy cause.

Not all donations are tax-deductible. Payments made to your local church, mosque, temple, or synagogue may not qualify unless the organisation is officially registered with DGR status. Always check before you claim.

Prepay Expenses to Maximise Your 2025 Tax Deductions

One of the simplest ways to reduce your taxable income in 2025 is to prepay eligible expenses before 30 June. This includes accounting fees, income protection insurance, and interest on investment loans. By bringing forward these payments, you can claim the deduction in this financial year—even if the service relates to next year.

This strategy is especially useful for high-income earners looking to manage cash flow and reduce their 2025 tax bill.

Note: You can prepay up to 12 months’ worth of eligible expenses and claim the deduction this year.

Understand Asset Deductions for the 2025 Tax Year

Thinking of buying a work-related phone or laptop before 30 June 2025? If you’re an employee, it’s important to know that any item over $300 is treated as a depreciating asset—not an immediate deduction.

At Investax, we often see taxpayers assume they can fully deduct big-ticket items upfront, but unless you’re a sole trader or business owner, these purchases must be depreciated over time.

Claiming Motor Vehicle Expenses in Your 2025 Tax Return

If you use your personal vehicle for work-related travel, you may be eligible to claim a deduction on your 2025 tax return—provided you own or lease the car and the travel meets ATO criteria. You can’t claim travel between home and work (except in limited cases), and salary-sacrificed or novated lease vehicles are not eligible.

Note: Home-to-work travel and vice versa is personal and not deductible.

Logbook Method – Maximise Your 2025 Car Deductions

Using the logbook method allows you to claim a percentage of actual car expenses—like fuel, rego, insurance, and depreciation—based on work-related use. If this is your first time, you must keep a logbook for at least 12 continuous weeks during the income year.

Note: A valid logbook is good for five years but can be updated any time or restarted if your vehicle or usage changes.

Cents per Kilometre Method – Simplified Claiming in 2025

Prefer a simpler option? You can claim 88 cents per kilometre for up to 5,000 work-related kilometres without keeping receipts. However, you still need to show how you calculated the distance—like a travel diary or calendar—and prove you owned the car.

Note: If two people jointly own the same car and use it for separate work purposes, each can claim up to 5,000 kilometres.

2025 Tax Tip: Salary Sacrifice an Electric Vehicle

Looking to upgrade your car in 2025? A novated lease on an electric vehicle (EV) through salary sacrifice could save you thousands in tax. When structured correctly, these vehicles are exempt from Fringe Benefits Tax (FBT), and the savings are passed on to you.

To qualify, the EV must be a:

• Battery electric or hydrogen fuel cell vehicle, 

If you locked in a plug-in hybrid lease before April 2025, you’ll continue receiving tax benefits. But plug-in hybrids bought after this date no longer qualify for the FBT exemption.

Note: Electric motorbikes and scooters are not eligible.

Manage Your 2025 PAYG Instalments

If you’re paying PAYG instalments—whether as a business owner, investor, or employee with a prior-year tax bill—it’s worth reviewing your income for 2025. If your income is lower than last year, you may be able to vary your final June quarter instalment to improve cash flow.

Note: Only vary your PAYG instalment if your 2025 income is genuinely lower than the previous year.

2025 Strategy: Use Investment Structures for Better Tax Outcomes

As an employee, tax-saving opportunities are limited. But if you’re investing in shares or property with strong income potential, consider using a company or trust structure for tax efficiency and asset protection.

• Company: Pays 30% tax on investment income; offers limited liability
• Trust: Pays no tax itself; can distribute income across beneficiaries and protect assets

Note: Investment structures like trusts and companies can help lower your overall tax and offer long-term benefits.

Conclusion: Proactive Tax Planning Pays Off in 2025

With rising costs and ongoing economic pressure, smart tax planning is more important than ever in 2025. Whether it’s prepaying expenses, adjusting PAYG instalments, contributing to super, or investing through a structure—every move can make a real difference to your bottom line.

This guide is part of Investax Group’s commitment to help you stay ahead of the game. If you need tailored advice or want to map out a longer-term strategy, get in touch with one of our tax specialists today.

Reference

ATO – Notice of Intent 

ATO – Medicare Levy Surcharge

ATO – Using Capital Losses to Reduce Capital Gain

ATO – Electric Vehicle