The Australian Federal Budget for 2025-26 was recently handed down by Treasurer Jim Chalmers, presented against the backdrop of an upcoming Federal election. This year’s budget aims to balance the need to provide cost-of-living relief to Australians with the economic realities of managing a budget deficit. Key focus areas include delivering support to individuals and addressing taxation.

It is important to note that the policies outlined in this article are yet to be passed as legislation and therefore may be subject to change.

The full Budget papers are available at budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au. The tax and tax-related highlights are set out below.

Key budget measures

Income tax cuts

• A modest income tax cut is a centrepiece of the budget.
• Delivered through a reduction in the first marginal tax rate.
• The first marginal tax rate will decrease from 16% to 15% on 1 July 2026, and further to 14% on 1 July 2027.
• All taxpayers will benefit from a reduction in income tax.

Cost-of-living relief

• Measures aimed at easing the cost of living for Australians.
• Extension of energy bill rebates.

Taxation

• Continues the recent trend of minimal tax reform.
• Does not address broader reforms needed across the tax system.
• Increases funding for the Australian Taxation Office (ATO).

Impact on small business

• Limited new measures supporting small businesses.
• Concerns remain about the decline of the small business sector.
• No reform to the small business capital gains tax (CGT) concessions.
• Still no amendment to the $2 million aggregated turnover threshold for CGT small business entity eligibility.

How LDB can help

Interpreting the Federal Budget and understanding its implications can be complex. LDB is here to help you make sense of these changes and identify opportunities for your individual circumstances or your business.

• Tax Consulting — Stay compliant and make the most of current tax regulations.
• Business Advisory — Strategic advice to help you adapt and thrive.
• Wealth Management — Guidance to help you secure and grow your financial future.

Reach out to LDB today for tailored advice and support. We’re here to help you navigate these changes with confidence.