The Labor government has released its 2025-2026 budget which, similar to recent years, is aimed at balancing cost-living relief while not negatively impacting inflationary pressures. This coupled with increased international uncertainty and decreasing income receipts has seen the forecasts return to a deficit which is predicted to continue for the next decade.
The key measures in relation to the cost of living relief include modest tax cuts for individuals commencing on 1 July 2026, an extension of the electricity rebate for individuals and SME’s, and expansion of the PBS and other measures to make health care more affordable.
Perhaps unsurprisingly, given the federal election is imminent, there was little to address the ongoing issues in relation to taxation reform and productivity weakness in the Australian economy.
In our detailed overview below, we break down the key highlights of the 2025 budget, offering insights into how these measures affect individuals, families, businesses and not-for-profits.
As a demand-driven program, the estimated costs for the NDIS are subject to adjustments as the scheme continues to mature and undergo reform initiatives to ensure the sustainability of the scheme.
Total spending on the NDIS is expected to reach $63 billion by 2028-29, which is expected to exceed spending on Defence and Education.
In line with the Government’s commitment to keep annual growth of the NDIS under 8% from 2026-27 onwards, the NDIS funding forward estimates in the 2025- 26 budget have undergone cost cutting measures compared to the 2024-25 budget.
The Government plans to achieve this by more consistently allocating NDIS participant plan budgets based on their individual needs and supporting them to spend in accordance with their plans.
Other key sector budget items:
Accessible Australia Program: $17.1 million will be allocated to establish the program, aiming to increase inclusive public infrastructure.
The 2025 Australian Federal budget has delivered a series of critical measures aimed at transforming the aged care sector. With an aging population and increasing demand for aged care services, these initiatives are designed to address systemic challenges, improve the quality of care, and ensure sustainability for the future. The key priorities in this year’s budget span across funding, workforce development, innovation, and reforms guided by the recommendations of the Royal Commission into Aged Care Quality and Safety.
A Strong Commitment to Funding
A cornerstone of the 2025 budget is the significant investment in aged care funding. The Government has allocated an additional $2.6 billion to improve the financial sustainability of the sector. A major portion of this funding is dedicated to increasing wages for aged care workers, including nurses and personal care attendants, who are at the core of providing quality care to older Australians.
Another focus area is the enhancement of residential aged care services. Facilities will receive additional funding to improve infrastructure, ensure compliance with new regulations, and invest in technology to streamline operations and enhance the care experience for residents.
The aged care sector has long faced challenges in workforce development, with issues such as low wages, high turnover rates, and workforce shortages impacting the delivery of quality care. The 2025 budget introduces a range of measures to address these challenges.
Guided by the recommendations of the Royal Commission into Aged Care Quality and Safety, the government is implementing significant reforms to the sector. A key element of these reforms is the introduction of the new Aged Care Act, which will take effect on 1 July 2025. The Act aims to create a more person-centred, rights-based approach to aged care, ensuring that the needs and preferences of older Australians are prioritised.
In addition, the budget emphasises innovation in aged care, with funding allocated to support research, technology adoption, and the development of new care models. For example, the government is encouraging the use of digital health technologies and telehealth services to improve access to care, particularly for older Australians living in remote areas.
One of the most significant changes in the 2025 budget is the transition from the current Home Care Packages Program to the new Support at Home Program, set to commence on 1 July 2025. This program aims to simplify and enhance the delivery of home care services, making it easier for older Australians to access the support they need to remain living independently in their homes.
Key features of the Support at Home Program include:
The 2025 budget reflects the Government’s commitment to a holistic approach to aged care. In addition to the initiatives outlined above, funding has been allocated to address broader determinants of health and wellbeing for older Australians, such as nutrition, mental health, and social connectedness.
From 1 July 2026 the tax rate for income generated between $18,201 – $45,000 will reduce from 16% to 15%. This will result in a tax saving of $268 a year or $5.15 a week for those earning above $45,000.
Then from 1 July 2027 the tax rate for the same tax band will reduce further from 15% to 14%. This will provide further a tax saving of $268 a year.
The combined tax saving will be $536 a year by the time we get the 2028 financial year.
The energy rebate will be extended a further six months from 1 July 2025. This means that a further $150 will be credited to each household’s energy account by December 2025, $75 a quarter.
The Government announced an expansion to the Medicare bulk billing incentive to increase bulk billing practices and services in the community. This will reduce the cost of going to see the doctor.
By 1 June 2025 there will be a once off 20% reduction in HELP debts. The indexation rate of HELP debts, which is applied 1 June each year will also be reduced.
The threshold where compulsory HELP repayments are required through an individual’s income tax return will be increased. This will delay when individuals are required to start repaying the HELP debts.
From 1 April 2025 to 31 March 2027 foreign buyers will not be able to purchase existing homes in Australia.
The Budget was super quiet on the Super front. While no new announcements were made, previously announced changes, not yet implemented, appear to be still on the table and will be taken to the election.
These include:
The following changes come into effect from 1 July 2025:
The following change comes into effect from 1 July 2026:
The government announced $407.5m over four years to NSW, SA, Tasmania and ACT under the Better and Fairer Schools Agreement.
The Government did not announce that it will extend the $20,000 instant asset write off. This would mean the instant asset write off threshold will revert to $1,000 from 1 July 2025. Assets costing more than $1,000 can be pooled; with a 15% deduction in the first year and 30% deduction in subsequent years.
The Government will extend the energy bill relief for around 1 million small businesses. Eligible small businesses will receive a $150 rebate (i.e. two quarterly instalments of $75) directly off their electricity bill through to 31 December 2025.
The Government will freeze indexation on the draught beer alcohol excise for a 2-year period. Biannual indexation will re-commence from August 2027.
The Government will provide $1.2 million in funds to establish a Social Enterprise Loan Fund to offer small loans to social enterprises, particularly those focused on creating employment opportunities for marginalised communities.
From 2027, the Government will ban non-complete clauses for employees earning less than the high-income threshold, currently $175,000 a year, to enable them to move to a new job or establish their own business.
Employers of apprentices in housing-related occupations may continue to be eligible to receive up to $5,000 as a “priority hiring incentive” through to 31 December 2025.
The Minister for Women Katy Gallagher said that the Government is “not having the impact we would like to see” when it comes to women’s safety. The current government has committed $4 billion towards ending violence against women and children “in a generation”.
The 2025–26 budget marks a significant commitment to addressing the national crisis of gender-based violence through comprehensive funding and support initiatives:
Women experience more chronic health conditions, with higher health care demand and out-of-pocket costs. Women also have complex sexual and reproductive health conditions that have been underfunded and under researched.
The government has attempted to cover some of these issues, particularly looking at contraception, endometriosis and pelvic pain relief, and menopause support.
The key budget initiatives include $134.3 million to increase Medicare rebates by 150% for long-acting reversible contraceptives, new oral contraceptives have been listed for the first time and will become available from May 1 and another $109.1 million will be allocated to fund two national trails that are aimed at making it cheaper and easier for women to access contraceptives and treatment for urinary tract infections.
The government has announced that it will invest $20.9 million over three years for endometriosis and pelvic pain clinics to support the one in nine Australian women suffering from endometriosis. This includes 11 new clinics ad building upon the 22 already established. These clinics will also support women dealing with perimenopause and menopause. Treatments for endometriosis will also be listed under the PBS which is expected to save approx. 8,500 women hundreds of dollars a year. Medicare rebates for ultrasounds to assist women with severe endometriosis will be available from November 1.
The Government is seeking to support for women experiencing menopause and perimenopause by listing new menopause hormone therapies on the PBS from 1 March 2025, with around 150,000 women saving hundreds of dollars per year in out-of-pocket expenses and introducing a new Medicare item for menopause health assessments to ensure women can get the care and support they need from their general practitioner.
To assist health professionals $4.4 million has been provided for health professionals to access education and training on menopause and perimenopause and to create national clinical guidelines. $12.8 million will be invested in a national public health awareness campaign.
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