Federal Budget Summary 2025

In this special report, we look at the key takeouts from the 2025 Federal Budget and what it means for tax, superannuation and social security that may impact wealth creation and retirement funding strategies for advisers and clients.

Overview

There is very little change in this year’s budget that has any significant impact on clients from a financial planning perspective.

From a superannuation perspective, the budget did confirm the Government’s intention to proceed with the tax on superannuation balances exceeding $3million, which could impact a number of clients. There are also no plans to change the approach of effectively taxing unrealised capital gains, and still no indexation of the $3million threshold, which means more and more people will be impacted by this proposed tax.

At a more general level and against the backdrop of a looming federal election and increased global uncertainty contributed to by tariffs from the United States, the 2025–26 Budget confirmed the shift from back-to-back budget surpluses to the first in a series of forecast budget deficits. This year’s headline deficit is estimated at $27.6 billion, and $179.5 over four years. When you include ‘off budget’ spending, such as the investment in the National Broadband Network and Whyalla Steelworks, the deficit is estimated at $65.2 billion and $283.4 billion over four years.

Public opinion polling has consistently demonstrated that cost of living is the most important issue affecting voters as we draw closer to the federal election - something this budget seeks to further address by announcing new personal income tax cuts which will see the first marginal tax rate reduced from 16 to 14 per cent over two years. In addition to this there is an additional $150 energy bill rebate coming into effect from 1 July and a pause on indexation of draught beer excise for a two year period, from August.

The budget also proposes an increase to the income caps and property prices under the Help to Buy Scheme. Although this is good for first home buyers at auctions across Australia, the Budget does little to address supply side issues, with state and territory governments set to share in just $54 million set aside to grow the prefabricated and modular home sector.

One of the key initiatives in the Budget is the $8.5 billion commitment to expand bulk-billing incentives to all Australians. The Budget also includes $785 million to reduce the cost of scripts under the Pharmaceutical Benefits Scheme to $25, which, from 1 May, will also include the contraceptive pill, endometriosis treatments, and cancer-related listings. A further $658 million has been earmarked to open an extra 50 Medicare Urgent Care Clinics.

In response to the imposition of tariffs on Australian steel and aluminium, the Government has unveiled its “new” Buy Australia Plan. The Buy Australia Plan will see $20 million allocated to the Department of Prime Minister and Cabinet which will be used to encourage consumers to buy Australian made products.

The Government will defer the start date of the amendments to the foreign resident capital gains tax regime and confirmed it will ban foreigners from purchasing established dwellings for two years from 1 April.

The following is an overview of the key budget initiatives across the focus areas the government has targeted.

Key Budget initiatives

Helping with the cost-of-living
• Delivering new tax cuts for every Australian taxpayer
• $1.8 billion to extend energy bill relief (to the end of calendar year)
• Banning most non-competes; and $2.6 billion to increase award wages of aged care nurses
• $784.6 million to make PBS scripts cost maximum $25; and $1.8 billion for new and affordable medicines
• Cutting student debt by 20 per cent and making the repayment system fairer

Strengthening Medicare
• $7.9 billion to make 9 out of 10 GP visits bulk billed by 2030
• $1.8 billion funding boost to public hospitals
• 50 additional Medicare Urgent Care Clinics, bringing the total to 137 nationwide
• $662.6 million to grow the workforce of doctors and nurses
• $792.9 million to deliver lower costs, more choice and better healthcare for women

Making it easier to buy and rent a home
• Building more homes faster through modern construction methods; and expanding Help to Buy
• Banning foreign buyers from purchasing existing dwellings for two years
• Up to $10,000 for eligible apprentices in housing construction occupations

Investing in every stage of education
• $5 billion towards building a new universal early childhood education and care system
• Guaranteed eligibility for at least 3 days a week of subsidised early childhood education and care
• Putting public schools on a path to full and fair funding
• Making Free TAFE permanent and reforming our universities

Building a stronger economy
• A more productive and dynamic economy through new National Competition Policy measures
• Building a Future Made in Australia, including over $3 billion to support green metals production
• $2 billion expansion of the Clean Energy Finance Corporation

Broadening opportunity and increasing equality
• Driving progress on economic equality for women and over $4 billion to address gender-based violence
• $842.6 million to support critical services in remote First Nations communities in the Northern Territory
• $423.8 million to support people with disability

Conclusion
All in all, this is a budget that does provide a reasonable amount of cost-of-living relief, which is not surprising in the lead up to the election. However, with inflation now back in an appropriate range, there is a risk that putting money back into peoples’ pocket, combined with the uncertainty in global conditions and potential for trade wars could put pressure on inflation, reducing the potential for future interest rate cuts.

Overall, as highlighted at the outset of this overview, there is very little impact from a financial advice perspective.

General Advice Warning
The information in this presentation contains general advice only, that is, advice which does not take into account your needs, objectives or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial advice that addresses your specific needs and situation before making investment decisions. While every care has been taken in the preparation of this information, Infocus Securities Australia Pty Ltd (Infocus) does not guarantee the accuracy or completeness of the information. Infocus does not guarantee any particular outcome or future performance. Infocus is a registered tax (financial) adviser. Any tax advice in this presentation is incidental to the financial advice in it.  Taxation information is based on our interpretation of the relevant laws as at 1 July 2020. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Any case studies included are hypothetical, for illustration purposes only and are not based on actual returns.