- 26 March 2025
- Posted by: runningthenumbers
- Category: Federal Budget
Budget 2025-26: Tax, Small Business & HECS Changes
The 2025-26 Federal Budget delivers modest personal tax cuts, increased ATO compliance, and key changes for small businesses and students.
Personal Income Tax Cuts
From 1 July 2026, the tax rate for incomes between $18,201–$45,000 will drop from 16% to 15%, then to 14% from 2027-28. The maximum tax savings will be $268 in 2026-27 and $536 from 2027-28.
HECS-HELP Debt Reduction
From 1 July 2025, HECS-HELP debt will be cut by 20%, and repayment thresholds will be adjusted to reduce repayment amounts. This provides relief for students facing rising education costs.
ATO Compliance Crackdown
The ATO has been allocated $999 million to extend compliance programs, including:
- Tax Avoidance Taskforce
- Shadow Economy Compliance
- Personal Income Tax Compliance
These programs aim to recover $3.2 billion in revenue.
Small Business Measures
- $20,000 Instant Asset Write-Off: Available for 2024-25 but still stalled in Parliament.
- Help to Buy Scheme: Income thresholds increased to $100,000 (singles) and $160,000 (couples), helping first-home buyers.
- Non-Compete Clauses Banned: From 2027, employment contracts can’t restrict employees (earning under $175,000) from moving to competitors.
- Trade Tariffs Extended: 35% tariff on Russian and Belarusian imports continues.
Business Taxation & Liquor Industry Support
- Beer Tax Freeze: Draught beer excise paused for 2 years from August 2025.
- Alcohol Producer Rebates: Excise remission cap for brewers, distillers, and wine producers increased to $400,000 from 1 July 2026.
What’s Next?
With an election approaching, key tax measures like the 30% tax on super balances above $3 million and the instant asset write-off remain uncertain. If not passed soon, they may lapse when Parliament dissolves.
Final Thoughts
The Budget offers modest tax relief, student debt relief, and housing support while increasing ATO oversight. Small businesses and individuals should watch for legislative updates on taxation and compliance.