Federal Budget 2025 -2026. Winners and Losers

Overview of Winners and Losers in the 2025 Federal Budget

The 2025-26 Budget has been a delicate balancing act for the government—aiming to win over voters ahead of the election with personal income tax cuts and cost-of-living relief, while also striving to maintain fiscal responsibility. Although the government has introduced key measures to ease the cost of living, a stronger emphasis on boosting productivity and encouraging business investment would have been a welcome addition.

A surprise in the Budget is the unexpected personal income tax reductions commencing from 1 July 2026. The starting rate of income tax will reduce from the current 16 percent to 14 percent by 2027-28. This will cost an estimated $17.1 billion over the forward estimates period.

While the Australian Taxation Office is receiving nearly $1 billion in additional funding for compliance activities, the Budget does not signal any tax reform which may be needed to fuel Australia’s future growth and to protect our competitive position globally.

Winners

• Taxpayers

  • Income tax cuts for Australians, with the rate for earnings between $18,201 and $45,000 reduced from 16% to 15% in July 2026, and further reduced to 14% in July 2027. Taxpayers earning over $45,000 will save $268 initially and $536 the next year.

  • Total cost to the government: $17.1 billion.

First Home Buyers

• • Increased income and property price caps for the Help to Buy scheme, allowing more first home buyers to access up to a 40% contribution towards their new home, with a 2% deposit.

  • Cost to the budget: $800 million.

Women’s Health

• • $240 million allocated for women’s health initiatives, including additional funding for specialist clinics and cheaper medications for conditions like endometriosis, perimenopause, and menopause.

Households

• • Additional $150 energy bill relief for all Australian households and businesses, paid in two $75 instalments over six months, extended until the end of 2025. This builds on last year’s $3.5 billion power bill relief program.

Low and Middle-Income Workers

• • A ban on non-compete clauses for workers earning under $175,000, potentially improving productivity and wages by up to 4%.

Beer Drinkers

• • Draught beer excise will be frozen for two years starting in August 2025, costing the government $165 million over five years.

Refugees

• • $7.7 million allocated to the Economic Pathways to Refugee Integration program and $3.5 million for refugee resettlement.

Multiculturalism

• • $178 million for initiatives to increase social cohesion, including security upgrades for community centers and synagogues, and the creation of a national hate crimes database.

Higher Education Loan Program

• • $19 billion in student debt reduction for 3 million Australians, with a 20% reduction in existing debt and an increased income threshold for repayment starting in 2025-26.

Losers

Tax Dodgers

• • A crackdown on tax avoidance with a $999 million investment into the Australian Taxation Office (ATO) to increase compliance, generating an additional $1.8 billion in tax revenue over five years.

Russia and Belarus

• • A continuation of the 35% tariffs on goods from Russia and Belarus until 2027 in response to Russia’s invasion of Ukraine.

Tobacco Criminals

• • $156.7 million directed towards disrupting the illicit tobacco trade, which has caused a significant revenue loss for the government, with tobacco revenue expected to drop by $6.9 billion over five years.

Welfare Recipients

• • No new increases to welfare payments such as Jobseeker, despite calls from social service groups.

Budget Bottom Line

The government’s tax cuts and pre-election commitments will add $17 billion to the budget’s costs, with significant revenue losses, including $6.9 billion from tobacco and $1.9 billion from company tax receipts over the next five years.

Despite these challenges, the Treasurer delivered a budget deficit of $42 billion for the 2025-26 financial year.

Conclusion

The 2025 Federal Budget presents significant financial relief for many Australians, particularly taxpayers, first home buyers, and low-income workers. However, certain groups, like tax dodgers, tobacco criminals, and welfare recipients, will face additional burdens or see little benefit. With a focus on short-term relief and pre-election promises, the budget leaves much-needed tax reform off the table, leading to a growing budget deficit in the coming years. As a result, while many will see immediate benefits, the long-term financial health of the country remains uncertain.

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