New tax cuts for every Australian taxpayer

The Government will deliver more tax cuts to all Australian taxpayers, with additional tax cuts in 2026 and 2027. This tops up the first round of the Government’s tax cuts that have been rolling out since July 2024.

The Government will deliver these new tax cuts over two years, which will help ensure fiscal settings remain consistent with inflation sustainably remaining in the Reserve Bank of Australia’s target band.

• From 1 July 2026, the 16 per cent tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15 per cent.
• From 1 July 2027, this tax rate will be reduced further to 14 per cent.

Helping Australians keep more of what they earn

The Government’s new tax cuts will put more money in people’s pockets.

A worker on average earnings will get a new tax cut of $268 in 2026–27 and $536 per year from 2027–28, compared to 2024–25 tax settings.

Combined with the first round of tax cuts, they will receive a total tax cut of $1,922 in 2026–27 and $2,190 per year from 2027–28, compared to 2023–24 tax settings.

In 2027–28, the average combined annual tax cut across all taxpayers is expected to be $2,548, or around $50 per week.

Building a stronger economy

The Government’s combined tax cuts allow people to keep more of what they earn, boosting nominal household disposable income by 1.9 per cent by 2027–28.

The Government’s combined tax cuts are also expected to support labour force participation, increasing total hours worked by about 1.3 million hours per week compared to 2023–24 tax settings, equivalent to more than 30,000 full time jobs. This increase is mostly driven by women, who are expected to increase their labour supply by 900,000 hours compared to 2023–24 tax settings.

Increasing the Medicare levy low‑income thresholds

The Government will increase the Medicare levy low‑income thresholds by 4.7 per cent for singles, families, and seniors and pensioners from 1 July 2024. This means more than one million Australians on lower incomes will continue to be exempt from paying the Medicare levy or continue to pay a reduced levy rate.

More energy bill relief

The Government is extending energy bill relief to the end of 2025 for every household and around one million small businesses. The Government will provide around $1.8 billion in additional payments on top of the nearly $5 billion of bill relief being delivered so far. Every household and around one million small businesses will receive two $75 rebates directly off their electricity bills through to 31 December 2025.

Commonwealth and state energy bill relief has already helped to lessen electricity price increases, with prices dropping 25.2 per cent across 2024. The additional Commonwealth rebates are expected to maintain downward pressure on prices.

Growing wages

Limiting non‑compete clauses to boost wages and mobility

One in five workers are subject to non‑compete clauses that restrict their ability to move to a new job and are significantly suppressing wages. The Government will ban these clauses for low‑ and middle‑income employees, which is expected to boost wages as these workers are freed to move to more productive, higher‑paying jobs.

Funding wage increases for aged care and child care workers

In this Budget, the Government continues to support the aged care workforce with an investment of $2.6 billion for further pay rises for aged care nurses from 1 March 2025. This brings the total investment into wage increases in the sector to a total of $17.7 billion.

The Government is also investing $3.6 billion to support a historic wage increase for the early childhood education and care workforce. This is delivering a 10 per cent increase relative to modern award rates from December 2024 and will provide a further 5 per cent from December 2025.

Cutting the cost of medicines

The Government is lowering the maximum cost of medicines on the Pharmaceutical Benefits Scheme (PBS) for everyone with a Medicare card and no concession card. From 1 January 2026, the maximum co‑payment will be lowered from $31.60 to $25.00 per script – the lowest in 20 years – and remain frozen at $7.70 for pensioners. Four out of 5 PBS medicines will become cheaper for general non‑Safety Net patients, with larger savings for medicines eligible for a 60‑day prescription.

$1.8 billion is being invested to list new medicines on the PBS – including new oral contraceptives and treatments for endometriosis, lymphoma, menopause and treatment‑resistant major depression. Since 1 July 2022, the Government has approved 319 new or amended PBS listings.

Cutting student debt

The Government is making changes that will cut a combined $19 billion in student loan debt for 3 million Australians and will make the student loan repayment system fairer.

The Government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20 per cent, subject to the passage of legislation. This will remove $16 billion from the student loan accounts of 3 million Australians. The 20 per cent reduction is in addition to the recent reform to make indexation arrangements fairer, limiting future indexation and retrospectively reducing the indexation applied in 2023 and 2024, which has already decreased student loan debt by $3 billion.

The Government is reforming the student loan repayment system from 1 July this year, subject to the passage of legislation. The Government will also increase the amount that people can earn before they are required to start paying back their loans from $54,435 in 2024–25 to $67,000 in 2025–26. No one will pay more under the new system, and compulsory repayments will be lower for people earning under around $180,000 and above the current minimum threshold.

These changes will deliver immediate cost‑of‑living relief for millions of Australians with student loan debts.

A better deal for consumers

A fair go for families, farmers and remote communities

The Government is boosting funding to the Australian Competition and Consumer Commission (ACCC) by $38.8 million to crack down on misleading and deceptive pricing practices and unconscionable conduct in the supermarket and retail sector.

The Government is providing $2.9 million to support fresh produce suppliers to enforce their rights under the Food and Grocery Code of Conduct. The Government has made the code mandatory and introduced multi‑million‑dollar penalties for breaches of the code by supermarkets.

To make it easier to open new supermarkets, the Government has provided $240 million for states and territories to liberalise, simplify and standardise their commercial planning and zoning regulations and processes, as agreed under the revitalised National Competition Policy.

The Government is also reducing the costs of 30 essential products, such as milk, fruit, vegetables and nappies in stores in remote First Nations communities to help ease cost‑of‑living pressures and improve food security.

Tackling excessive surcharges, unfair practices and scams

The Government is addressing unfair excessive card surcharges to get a better deal for consumers at the checkout. The Government is prepared to ban debit card surcharges, subject to further work by the RBA and safeguards to ensure small businesses and consumers can benefit from lower cost payments.

In addition, the Government will work with state and territory governments to introduce bans on unfair trading practices, and empower regulators to take action against businesses that fail to provide remedies for breaches of consumer guarantees under the Australian Consumer Law.

Funding of $6.7 million is being provided in 2025–26 to extend the operation of the National Anti‑Scam Centre to continue protecting Australians from scam activity. This builds on the over $180 million the Government has invested since 2022–23 across a range of anti‑scam initiatives, which has seen annual scam losses decrease by over $1 billion since 2022.