The 2025–26 Federal Budget delivered a mix of cost-of-living relief, targeted investments, and structural reforms. From income tax cuts and healthcare boosts to clean energy initiatives and housing policy changes, the budget touches nearly every aspect of Australian life—including those living and working abroad.
While the government has pitched it as a forward-looking, people-focused plan, industry responses have been mixed—welcoming some changes while calling for bolder action in productivity, innovation, and infrastructure.
Here are the key highlights—and how they might affect you:
From 1 July 2026, the marginal tax rate on income between $18,201 and $45,000 will be reduced from 16% to 15%, and further to 14% from 1 July 2027. These cuts follow earlier reforms from July 2024. A worker earning around $79,000 will receive an extra $268 tax cut in 2026–27 and $536 annually from 2027–28, compared to 2024–25 settings. Total savings by 2027–28: $2,190/year.
From 1 April 2025, foreign buyers are banned from purchasing existing homes in Australia for two years. Australians overseas may be considered "foreign buyers" if not classed as tax residents, so check your residency status before buying.
From 2027, non-compete clauses will be banned for workers earning under $175,000/year. This is designed to improve job mobility but has drawn criticism from business groups.
A 20% cut to all existing student loan debts is proposed, pending legislation. The repayment threshold will rise to $67,000+ from 2025–26.
A $7.9 billion investment is allocated to bulk bill 90% of GP visits by 2030. The government also plans to expand Urgent Care Clinics nationwide.
More than $3 billion is committed to clean energy, green metals, and renewables. A new “Front Door for Investors” initiative aims to streamline major projects and attract foreign investment.
The budget includes $3 billion for National Broadband Network (NBN) upgrades and $330 billion in defence industry spending through 2034.
View the full 2025–26 Budget summary: budget.gov.au
For those of us, who would like it explained simply - here is a great graphic by SBS on what the 2025 federal budget would look like if it were $100:
Budget Reactions
The Australian Industry Group called the budget "modest" and lacking in productivity and investment initiatives, labelling the non-compete clause ban a "horror show".
The Australian Chamber of Commerce and Industry (ACCI) described the ban as 'heavy-handed', warning of risks to small businesses.
CPA Australia criticised the budget as lacking ambition and support for SMEs.
In the tech and innovation sector, the Tech Council of Australia welcomed skills and energy tech investments but said the budget missed opportunities to strengthen national competitiveness. They pushed for a Tech Investment Target to boost R&D to 4.6% of GDP.
Cooperative Research Australia praised ongoing support for research agencies and the $750 million green metals investment.
Housing bodies like the Property Council of Australia and Housing Industry Association raised concerns about a potential shortfall of 462,000 homes under the National Housing Accord. They pointed to state planning delays as the main issue, not construction capacity.
In agriculture and food, the National Farmers' Federation said the budget under delivers, citing transparency concerns and cuts to biosecurity.
The Australian Food and Grocery Council supported household relief but called for a broader business agenda to address transport, energy, and workforce needs.
Healthcare professionals, including the Australian Medical Association, welcomed investment in Medicare and women’s health but stressed the need for structural reform and more funding for nursing and allied health services.
While the budget includes welcome measures in health, tax, and green investment, major industry groups are calling for deeper structural reforms to boost competitiveness, innovation, and long-term economic growth.
Budget Reply
On Thursday evening, Opposition Leader Peter Dutton delivered his Budget Reply ahead of the upcoming federal election and outlined the Coalition's key policies in his, focusing on energy prices, migration, and fiscal management.
National Gas Plan to Reduce Energy Bills
Dutton announced a National Gas Plan aimed at prioritising domestic gas supply to lower energy costs. The plan includes fast-tracking new gas projects, halving approval times, and implementing a gas reservation policy to secure an additional 10% to 20% of the east coast's demand. This initiative seeks to reduce wholesale domestic gas prices from over $14 per gigajoule to under $10 per gigajoule.
Fuel Excise Reduction
The Coalition proposes cutting the fuel excise from approximately 50 cents to 25 cents per liter, estimating that this would save a one-car household about $14 per week, totalling roughly $700 over a year. The Australian Competition and Consumer Commission would oversee this reduction to ensure savings are passed on to consumers.
Migration Policy
Dutton confirmed plans to reduce the permanent migration program by 25%, decreasing the current cap from 185,000 to approximately 139,000 places. He argues that this reduction will alleviate housing demand and help restore the "great Australian dream of home ownership."
Support for Small Businesses
The Coalition intends to increase the instant asset write-off threshold for small businesses to $30,000, building upon the government's recent extension of a $20,000 threshold. This measure aims to encourage business investment and growth.
Public Sector and Health Investments
Dutton plans to reduce the federal public service workforce by 41,000 positions, projecting savings of over $10 billion. He assures that frontline service delivery roles will not be affected. Additionally, the Coalition commits to a $9 billion investment in health, including capping most Pharmaceutical Benefits Scheme prescriptions at $25 and allocating $400 million towards youth mental health services.