Newsletter; 2025/2026 Budget Update (your five minute guide)
Please find below a summary of the some of the more relevant budget announcements that affect taxation.
There were no substantive tax measures in the budget.
2025/2026 individual tax rates
Taxable income range Marginal tax rate
$ 0 - $18,200 0%
$ 18,201 - $45,000 16%
$ 45,001 - $135,000 30%
$135,001 - $190,000 37%
$190,001+ 45%
These rates exclude the 2% Medicare Levy.
The effective top personal marginal tax rate is 47% including the Medicare Levy.
From 1 July 2026, it is proposed that the 16% tax rate is reduced to 15% (then to 14% from 1 July 2027).
HECS Debt
Before 1 June 2025, it is proposed that the government will reduce all HELP debt balances by 20%.
From 1 July 2025, it is proposed that the amount people can earn before they are required to start paying back their debt increases to $67,000 (from $54,435).
Small business asset deductions
From 6 October 2020 to 30 June 2023, small business entities are able to immediately write off each eligible business asset they buy (uncapped limit).
From 1 July 2023 to 30 June 2025, the threshold was reduced to $20,000 and available to all business entities with turnover less than ten million dollars.
From 1 July 2025, the threshold will be reduced to $1,000. The legislation to extend the current $20,000 threshold has not been passed by Parliament (with the opposition proposing to increase the threshold to $30,000 and extent the availability to businesses with turnover less than fifty million dollars).
Small businesses can also deduct the value of their simplified depreciation pools at the end of the income year where the balance falls under the relevant threshold.
ATO interest deductibility
From 1 July 2025, it was proposed that general interest charged by the ATO would not be able to be claimed as a tax deduction. This legislation has not been passed by Parliament.
Banning non-compete clauses
It is proposed that the Government will ban non-compete clauses that apply to workers earning less than the high-income threshold in the Fair Work Act (currently $175,000).
Employee superannuation
From 1 July 2025, the super guarantee rate will increase to 12.0%.
2020/2021 9.5% 2023/2024 11.0%
2021/2022 10.0% 2024/2025 11.5%
2022/2023 10.5% 2025/2026 12.0%
From 1 July 2026, it is proposed that employers will be required to pay their employee’s superannuation guarantee on the same day that they pay salary and wages. This legislation has not been passed by Parliament.
Earnings for superannuation balances above $3 million taxed at 30% (Div 296)
From 1 July 2025, the Government has proposed to reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million.
Earnings relating to assets above the $3 million threshold will be taxed at 30%.
Earnings relating to assets below the $3 million threshold will be taxed at 15%.
It also controversially proposes the taxation of unrealised gains.
This legislation has not been passed by Parliament.
