Budget wrap
On Tuesday night, Treasurer Jim Chalmers released the 2025 federal budget.
Thanks to Cyclone Alfred, an election hasn’t been called yet, and the government delivered a relatively quiet budget. The main budget paper was only 93 pages long – it is normally more than 200 pages. The headline announcement that came as a surprise was a “modest but meaningful” tax cut for all individuals and this has already passed through parliament.
We’ve summarised the changes that may impact Verse clients below:
Tax cuts
The Government will deliver new tax cuts to every Australian taxpayer from 1 July 2026. The 16% tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15% on 1 July 2026. From 1 July 2027, this tax rate will be reduced further to 14%. The reduction in the lowest marginal tax rate means individuals will see a tax reduction of $268 next year, a reduction of $536 per year from 1 July 2026 when compared to the 2024-25 tax rates.
Medicare levy low-income thresholds for singles, families, and seniors and pensioners will increase from 1 July 2024 to provide cost-of-living relief. The increase to the thresholds ensures that low-income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.
Superannuation
The Transfer Balance Cap (TCB), which is the limit on the amount that can be transferred into a retirement income stream, will increase from $1.9M to $2 on 1 July 2025. This gives retirees the ability to invest a larger amount of their retirement savings in a tax-free environment.
Superannuation contribution caps won’t increase in 2025/26. They remain at $30,000 pa for concessional contributions and $120,000 pa for non-concessional contributions. We think it's likely these caps will be increased for 2026/27.
As planned, the superannuation guarantee rate will increase from 11.5% to 12% on 1 July 2025.
The Division 296 Bill that aimed to reduce tax concessions on earnings on superannuation balances exceeding $3 million remains in the Senate. If the Bill does not pass before the announcement of the Federal election, it will lapse
Energy
As a relief measure for all eligible households and small businesses to help with the rise in energy costs, the Government has proposed to extend the existing energy bill rebate for another six months until 31 December 2025. Eligible households and around 1 million small businesses will each receive $150 from 1 July 2025 ($75 per quarter).
HELP
The Government has announced changes to help reduce the burden of student debt, with some important changes coming up in June 2025. Firstly, there’s going to be a 20% reduction in the outstanding level of debt. This means that if you have any HECS/HELP debt, you will see a 20% cut in what you owe, giving you a significant break.
Additionally, they will increase the income thresholds at which you are required to begin repayments. From 1 July 2025, the amount that people can earn before they are required to start paying back their loans will increase from $54,435 in 2024–25 to $67,000 in 2025–26. This change is set to help ease the financial pressure, especially for those just starting in their careers.
Child care subsidy
The Government is replacing the Child Care Subsidy (CCS) Activity Test from January 2026 to guarantee at least 3 days of subsidised early childhood education and care (ECEC) each week for children who need it.
From January 2026, all families will be eligible for at least 72 hours of subsidised ECEC per fortnight (3 days per week), regardless of their activity levels. Families can still get 100 hours of subsidised ECEC per fortnight if they meet activity requirements or have a valid exemption. Families earning over $533,280 in 2024-25 are not eligible for subsidised care – consistent with current settings.
Home ownership equity scheme
The Government announced an $800 million expansion of the Help to Buy shared equity scheme, increasing income caps to $100,000 for individuals and $160,000 for couples and single parents, thereby broadening eligibility to nearly all first home buyers. This initiative aims to assist 40,000 households in purchasing homes by providing an equity contribution from the government.
Small business write-off
There was no further extension of the increased small business instant asset write-off threshold for small businesses. The seemingly annual ‘temporary’ increase to the legislated $1,000 threshold had become somewhat of a staple announcement for close to a decade. The $20,000 instant asset write-off threshold for the 2024–25 income year has been legislated. However, from 1 July 2025, it would appear that this threshold will revert to the legislated threshold of $1,000 for the first time in almost 10 years - a big loss for many SME's.
