2025/26 Federal Budget Summary
Written and accurate as at: Mar 26, 2025 Current Stats & Facts
25/26 Federal Budget Summary – What It Means for You
Prepared by Stirling Financial Consulting
On 25 March 2025, the Labor Government delivered the 2025/26 Federal Budget. As expected in a pre-election year, it was a largely restrained Budget, with few surprises beyond modest personal tax cuts. Against a backdrop of continued cost-of-living pressures, the Government appears focused on stability over reform once again missing the opportunity for reform.
While there were no significant changes that directly impact affluent families or business owners, there are several updates worth noting — and some planning opportunities we’ll be discussing with clients as we prepare for the new financial year.
Key Taxation Measures
- Personal income tax cuts have been announced for the 2026 and 2027 financial years. These changes marginally reduce the tax rate on income between $18,201 and $45,000 — providing only minor relief for most of our clients, but may be relevant for family members or lower-income earners.
- No extension to the $20,000 asset write-off means self-employed clients and business owners should consider bringing forward any planned asset purchases before 30 June 2025. This is a time-sensitive opportunity to maximise immediate deductions.
- HELP/HECS debt relief includes a 20% reduction in outstanding balances from 1 June 2025 and increased income thresholds before repayments commence. This may benefit adult children or junior team members, improving their long-term cash flow.
Superannuation Planning Considerations
While there were no new announcements impacting super, several previously legislated or proposed changes remain highly relevant:
- The Division 296 tax (15% additional tax on super earnings for balances over $3 million) remains on the table. There was no progress in this Budget, but we’re closely monitoring the legislation and will continue to engage clients likely to be impacted.
- Transfer balance cap indexation will increase from $1.9 million to $2.0 million from 1 July 2025. This creates opportunities for some clients to increase their retirement phase income streams.
- Total super balance (TSB) threshold will also index to $2 million — opening potential for additional non-concessional contributions for those previously locked out.
- Contribution caps will remain at $30,000 (concessional) and $120,000 (non-concessional) for 2025/26, but are expected to increase the following year. Strategically timing contributions will be important.
- The Super Guarantee (SG) rate will rise from 11.5% to 12% from 1 July 2025. For business owners using salary sacrifice or maximising their concessional cap, care is needed to avoid inadvertently breaching the cap.
- From 1 July 2026, SG contributions must be paid at the same time as wages. Business owners may need to adjust payroll systems and cash flow planning accordingly.
Aged Care and Broader Family Planning
- There were no major aged care announcements, but previously legislated reforms from 1 July 2025 may impact accommodation costs and care fee assessments. This could be relevant for clients supporting aging parents or considering family wealth planning across generations.
Energy and Household Support
- Energy rebates of $150 will be automatically applied to eligible small businesses and households through to the end of 2025. While not material for most of our clients, it reflects ongoing cost-of-living support across the economy and artificially reducing inflation.
What This Means for You
Overall, the 2025/26 Budget contains few direct changes for families, investors, or business owners — but several existing measures warrant proactive review. At Stirling Financial Consulting, we’ll be working closely with you to:
- Review super strategies in light of SG rate changes and cap indexation
- Identify any opportunities before the $20,000 asset write-off expires
- Monitor the potential rollout of Division 296 for large super balances
- Plan around retirement income limits and contribution timing
- Revisit cash flow and payroll planning for business clients ahead of SG timing reforms
As always, it’s important to remember that most Budget announcements are not yet law. We’re here to help you navigate the detail and adjust your strategy to stay one step ahead.
If you’d like to discuss how this year’s Budget may affect your personal or business situation, please get in touch.
