2025–26 Federal Budget Recap
“To ensure more Australians earn more – and keep more of what they earn.” That was the core promise from Treasurer Jim Chalmers in this year’s Federal Budget, which focuses squarely on easing cost-of-living pressures and boosting the long-term resilience of the Australian economy. With many households still feeling the financial squeeze, the 2025–26 Budget delivers a suite of practical measures designed to provide immediate relief, improve access to essential services, and invest in housing, healthcare, and education. So what does it all mean for everyday Australians? Here’s a breakdown of the key announcements. Tax Cuts for All Taxpayers The Budget delivers additional tax relief for every Australian taxpayer, building on the cuts introduced in July 2024. By 2027–28, the average combined tax cut across all taxpayers is expected to be $2,548 per year, or about $50 per week. To support lower-income Australians, the Medicare Levy low-income thresholds have also been increased—ensuring more individuals remain exempt from the levy or pay a reduced rate. More Energy Bill Relief With energy prices continuing to strain household budgets, the Government has announced a further $150 rebate for all households and eligible small businesses. This will be delivered automatically in two quarterly instalments and adds to the $300 in energy relief already announced in last year’s Budget. Cheaper Medicines From January 2026, the maximum cost of PBS medicines for general patients will fall from $31.60 to $25 per script—the lowest price in 20 years. For concession card holders, the co-payment will remain frozen at $7.70 until 2030. An additional $1.8 billion has been committed to listing new and affordable medications, including treatments for endometriosis, menopause, cancer, and depression. Student Debt Relief In a major move for current and former students, the Government will wipe 20% off all outstanding HELP and student loan balances—delivering $16 billion in debt relief to over 3 million Australians. From 2025–26, the repayment threshold will rise to $67,000, and a new marginal repayment system will reduce annual repayments for those earning less than around $180,000—making the system fairer and more affordable. Making Healthcare More Affordable The 2025–26 Budget includes the largest investment in Medicare in history, with $7.9 billion committed to improving healthcare access and affordability. Key measures include: An additional $793 million has been allocated to women’s health, improving access to contraception, menopause treatment, and pelvic pain clinics. Further funding will expand hospital services and GP training programs, particularly in regional areas. Housing Support for First Home Buyers and Renters With housing affordability remaining a national concern, the Budget includes new measures to support both homebuyers and renters. The Help to Buy scheme will be expanded, allowing more eligible Australians to enter the property market with lower deposits and smaller mortgages. Renters will also benefit from a 45% increase in Commonwealth Rent Assistance (compared to 2022 levels) and new national standards to improve renters’ rights—including limits on rent increases and stronger eviction protections. Investing in Education – From Early Years to University The Government is continuing its investment in lifelong education, with reforms spanning early childhood through to tertiary studies. Early Childhood Education: A new 3 Day Guarantee will ensure all families are eligible for at least three days of subsidised care each week. Free TAFE: The Budget makes 100,000 fee-free TAFE places permanent from 2027, helping Australians train for secure jobs in priority sectors. University Support: A further $2.5 billion will expand university access—especially for students from disadvantaged and underrepresented backgrounds. A Quick Note on Legislation Many of the measures announced in the Budget are proposals and may require legislation to pass before they take effect. Be sure to watch for confirmed start dates and eligibility criteria as more details become available. What Does It Mean for You? Whether it’s understanding how much tax you’ll save, how the HELP debt cut affects your repayments, or whether you qualify for the Help to Buy scheme—a financial adviser or accountant can help you make sense of the changes and tailor a plan that suits your circumstances.
Stop Resting on Your (High Income Earner) Laurels
Achieving a high income is a significant accomplishment. You’ve put in the hard yards, climbed the ladder, and now you’re pulling in the big bucks! But don’t be mistaken; a high income does not automatically equate to financial security. Just because the money is rolling in today doesn’t mean you’re protected from tomorrow’s uncertainties. Resting on your high-income earner laurels, assuming that a large salary guarantees long-term security without considering long-term financial planning, can be downright risky. So, before you get too comfortable, it’s time for a reality check. When “More” Becomes the Norm Earning more often leads to spending more, a phenomenon known as lifestyle inflation. As your income grows, so does your desire for bigger and better things—a nicer house, a new car, dinners at fine restaurants. This lifestyle upgrade can feel deserved, but without careful planning, it can leave you no better off financially than when you earned less. For instance, imagine a couple earning a combined $350,000 a year. On paper, that sounds like a strong financial position. But between a large mortgage, car loans, private school fees, and regular international holidays, their expenses could easily absorb most of their income. If an unexpected event like a job loss or economic downturn were to happen, they’d find themselves in a precarious situation, with little financial buffer. This is the danger of lifestyle inflation: it’s subtle and easy to justify, but it can undermine your ability to build real wealth. High Income ≠ Financial Security A high income can create the illusion of financial security. It’s easy to assume that as long as the money is coming in, you’re set for life. But without the right safeguards in place, a high income can actually mask financial vulnerabilities. Take Liam, for example. Liam, a 34-year-old marketing executive in Sydney, was earning $250,000 a year and living a pretty comfortable lifestyle. He assumed his high income meant he was financially secure. But when the pandemic hit, his job was made redundant, and without an emergency fund or sufficient savings, Liam found himself in financial distress within months. Liam’s story illustrates a key point: a high income is not a substitute for financial planning. If your finances aren’t structured to handle changes, even a hefty salary won’t protect you from financial uncertainty. How to Future-Proof Your Finances So, how do you make sure you’re not resting on your laurels, assuming that your high income will take care of everything? Here are some strategies to ensure you’re future proofing your finances, no matter how much you earn. A budget is just as important for high earners as it is for those with more modest incomes. Avoid the temptation to spend simply because you can. Instead, allocate funds towards savings, investments, and building an emergency fund. Even high earners need a safety net. A good place to start is having 3-6 months of living expenses in an emergency fund. This ensures that if something unexpected happens you’ll have the financial resources to cover your expenses without going into debt. Don’t rely solely on your salary—make your money work for you by building a diversified investment portfolio. The earlier you start, the better, as even small investments can grow significantly over time thanks to compound growth. Don’t wait—time is your biggest asset when investing! Even if retirement seems far away, it’s never too early to start planning. Superannuation is a tax effective structure for building wealth and making contributions to super can be a tax effective strategy for high income earners! Insurance might not be the most exciting part of financial planning, but it’s essential. Income protection, life insurance, and health insurance are vital tools to safeguard your financial future. Take Control Before Life Happens While earning a high salary certainly opens doors to a more comfortable lifestyle, it also comes with the risk of complacency. The belief that you’re financially set simply because you’re earning more is dangerous. Lifestyle inflation, lack of an emergency plan, and failure to invest wisely can all leave you vulnerable when life throws a curveball. It’s not about depriving yourself of the things you enjoy—it’s about ensuring that your financial future is secure, so you can continue enjoying them for years to come. So, don’t rest on your laurels. Take proactive steps now to secure your financial future. You’ve worked hard for that high income. Now it’s time for that income to work for you!