This year’s Budget was light on structural tax reform but included significant changes to personal income tax and a notable absence of new superannuation measures. Click here for a full report.
Personal Income Tax Cuts
The centrepiece of this Budget is the next phase of personal income tax cuts. Building on the revised Stage 3 cuts legislated in 2024, the government will deliver additional cuts from 1 July 2026:
- Average tax cut: Over $2,200 in 2026–27, and over $2,500 in 2027–28.
- Medicare Levy adjustments: From 1 July 2024, low-income thresholds will increase, ensuring continued exemption or reduced rates for low-income earners.
These cuts will apply to all taxpayers, affecting over 14 million Australians. The government’s approach is intended to ease cost-of-living pressures while keeping inflation in check.
Superannuation: No New Measures, But Increased Compliance
The Budget contained no new superannuation policy changes, signalling a period of regulatory stability for the sector.
However, the government has committed $50 million over three years from 1 July 2026 to bolster the ATO’s superannuation compliance activities, particularly targeting medium and large businesses. This initiative is expected to recover $31 million in unpaid super and reflects an increased focus on enforcement and system integrity.
Broader Economic Outlook
- Real GDP growth is expected to slow to 1.5% in 2024–25, rebounding to 2.25% in 2025–26.
- Inflation has returned to the RBA’s target band, forecasted to remain at 2.5% through to June 2025.
- Unemployment is projected to peak at 4.25% in 2024–25.
- Real wages are forecast to rise by 0.5% in 2024–25.
In Summary
The 2025–26 Federal Budget delivers meaningful tax relief for individuals and confirms a continued pause on superannuation reform, instead focusing on compliance and enforcement.
The key message: tax cuts are coming, and while super settings remain unchanged, the regulatory focus is sharpening.
To learn more about how the Federal Budget may affect you or your business, please contact us on 08 9328 5044 or email advice@moiler.com.au.
