On March 26, 2025, The Australian Federal Budget for the 2025-2026 financial year, marking a significant shift in economic policy with a focus on cost-of-living relief and tax cuts. This budget comes at a critical time, with an election looming and economic challenges such as rising living costs and global economic uncertainty. In this article, we will break down the key measures announced in the budget and explore how they impact individuals across various sectors.
Introduction to the Budget
The 2025-2026 Federal Budget is designed to address pressing economic challenges while providing relief to households and individuals. It includes a mix of tax cuts, healthcare improvements, education support, and housing initiatives. The budget’s focus on cost-of-living relief is particularly noteworthy, given the current economic climate.
Tax Cuts
One of the most significant announcements in the budget is the reduction in personal income tax rates. The current 16% tax rate for income between $18,201 and $45,000 will be lowered to 15% from July 1, 2026, and further reduced to 14% from July 1, 2027. This change will result in annual tax savings of up to $268 from July 2026 and up to $536 from July 2027 for those in this income bracket.
Impact on Individuals
- Increased Disposable Income: Lower tax rates mean more money in the pockets of taxpayers, which can be used for savings, investments, or everyday expenses.
- Economic Stimulus: By increasing disposable income, the government aims to boost consumer spending and stimulate economic growth.
Cost of Living Relief
Energy Bill Relief
The budget extends the energy bill relief program, providing an additional $75 quarterly rebate for households and eligible small businesses until the end of 2025. This measure is part of a broader effort to help Australians manage rising energy costs.
Impact on Households
- Reduced Energy Costs: The extension of energy rebates will help households and small businesses manage their energy expenses, providing essential relief during a period of high inflation.
- Economic Support: By reducing energy costs, the government aims to ease the financial burden on families and businesses, supporting economic stability.
Healthcare Initiatives
The 2025 Federal Budget marks a significant investment in Australia’s healthcare system, with a focus on improving access, affordability, and quality of care. Here are the key healthcare initiatives and how they will impact individuals:
Medicare Enhancements
- Bulk Billing Expansion: The government has committed to the largest investment in Medicare since its inception, with $7.9 billion allocated over four years to increase bulk billing. The aim is to achieve nine out of ten GP visits being bulk billed by 2030, resulting in an additional 18 million bulk billed visits annually.
- Bulk Billing Practice Incentive Program: Starting November 1, a new program will offer a 12.5% loading payment on Medicare rebates for practices that bulk bill all patients. This initiative is expected to encourage more practices to adopt full bulk billing, benefiting approximately 4,800 GP practices by 2030 and saving patients $859 million annually.
- Medicare Benefits Scheme (MBS) Enhancements: An additional $256.2 million will be invested in the MBS to add and amend listings, ensuring more services are covered under Medicare.
- Modernization of My Health Record: $228.7 million has been allocated to modernize My Health Record, enhancing digital health services and patient data management.
- MRI Services: $17.3 million will be used to improve access to affordable MRI services in areas with below-average bulk-billed MRI services, pending changes in MRI licensing requirements from July 1, 2027.
- Medical Costs Finder Upgrade: $7 million will be spent to upgrade the Medical Costs Finder website, increasing transparency on fees charged by non-GP specialists.
Pharmaceutical Benefits Scheme (PBS)
- Reduced Co-payments: The maximum co-payment for PBS medicines will decrease from $31.60 to $25.00 per script, marking a 20-year low. Pensioners will continue to pay $7.70 per script.
- New and Amended Medicines: $1.8 billion will be committed to adding new and amended medicines to the PBS, including treatments for endometriosis, lymphoma, menopause, and treatment-resistant depressive disorders.
Pharmacy Initiatives
- Improved Access to Medicines: Funding will be provided over six years to enhance access to medicines and expand services offered by community pharmacies.
- Pharmaceutical Wholesalers Agreement: $539.4 million will be allocated over five years to establish the First Pharmaceutical Wholesalers Agreement, ensuring consistent access to medicines across Australia.
- Trials for Contraceptives and UTIs: $109.1 million will support trials to increase access to contraceptives and treatments for uncomplicated urinary tract infections.
Women’s Health
- Accessibility and Affordability Package: A $792.9 million package will improve access to healthcare for Australian women, including new PBS listings for contraception and menopausal hormone therapies, and the establishment of new endometriosis and pelvic pain clinics.
- Long-Acting Reversible Contraceptives (LARCs): $134.3 million will be invested to enhance access to LARCs and establish eight new LARC Centres of Training Excellence.
Mental Health
- Digital Mental Health Services: An additional $46.0 million over four years will support digital mental health services, complementing the $588.5 million committed in the previous budget for a national low-intensity digital mental health service.
Aged Care
- Payment Reform: The government will transition to paying aged care providers in arrears rather than in advance, starting from July 2026, which is expected to save $2.5 billion over three years.
- Care Minutes Funding: Funding for care minutes will be linked to actual delivery, with adjustments to the registered nurse supplement providing $233 million in savings over four years.
- Wage Increases: $2.6 billion will be allocated over five years to increase the award wages of aged care nurses, with an additional $90 million for other aged care workers.
Dental Care
- Public Dental Services Extension: $107.8 million will be used to extend the Public Dental Services for Adults funding agreement until June 30, 2026, supporting eligible adult dental patients.
Hospitals
- Public Hospital Funding Boost: A one-off $1.8 billion funding boost will be provided to public hospitals in 2025-2026 to reduce waiting lists and wait times in emergency rooms.
Our Approach
The 2025-2026 Federal Budget is a comprehensive package designed to address the pressing economic challenges faced by Australians. With its focus on tax cuts, cost-of-living relief, healthcare improvements, and education support, the budget aims to provide financial stability and stimulate economic growth. While these measures are subject to legislative approval, they represent a significant shift in policy direction, prioritizing the needs of individuals and households during a critical period.
At Philips Group, we are committed to helping our clients navigate these changes and maximize the benefits available to them. Whether you are looking to understand how tax cuts will impact your income, how to manage your student debt, or how to leverage housing initiatives, our team of financial advisors is here to provide personalized guidance and support.