| 2025-26 Australian Federal Budget: Key Highlights for Australians heading into an Election |
| The 2025–26 Federal Budget, handed down by Treasurer Jim Chalmers, outlines a broad mix of cost-of-living relief, modest tax reform, housing market interventions and economic transformation initiatives. For property investors and business owners, this budget comes at a crucial time—balancing rising operational costs with opportunities for long-term growth. At LMS Advisory, we’ve distilled the most relevant updates to help you make sense of the changes and what they mean for your investment strategy. |
The 2025-26 Federal Budget revealed the Labor government’s first deficit since taking power in 2022.
Forecasts for the 2024-25 year were revised to show a $27.6 billion deficit, and forecasts show the deficit is expected to grow to $42.1 billion in 2025-26 before a gradual decline. Despite the deficit, the Labor government said the bottom line was still in a better position than how it was handed over by the Coalition.
Treasurer Jim Chalmers has kicked off the 2025-26 Budget by declaring that cost-of-living pressures are “front and centre,” unveiling two surprise tax cuts for all Australian taxpayers.
From 1 July 2026, the 16% tax rate, which applies to taxable income between $18,201 and $45,000 will be reduced to 15%, with a further reduction to 14% effective from 1 July 2027.
2025–26 Federal Budget: Key Takeaways for Property Investors and Business Owners
Summary of key proposals
1. Economic Landscape & Budget Snapshot
- From Surplus to Deficit: The budget shifts from a $15.8 billion surplus to a forecast $27.6 billion deficit in 2024–25, growing to $42.1 billion in 2025–26.
- Rising Debt: Net debt is forecast to hit $620 billion next year, while gross debt will reach $1.2 trillion by 2028–29.
- Moderate Growth Ahead: GDP growth is forecast at 1.5% for 2024–25, rising to 2.25% the year after.
- Inflation Outlook: Expected to drop to 2.5% in 2024–25, but may tick up to 3% thereafter.
đź’ˇ LMS Insight: Understanding the macroeconomic backdrop helps property investors prepare for interest rate shifts and inflation-driven pricing dynamics. Years of Deficits and increasing total debt shows fiscal irresponsibility. Future governments will need to fix this.
2. Personal Tax Cuts and Rental Affordability
- From July 2026, the 16% tax rate on income from $18,201–$45,000 drops to 15%, and to 14% by July 2027.
- Estimated savings for the average earner: up to $536 annually by 2027–28.
đź’ˇ LMS Insight: These cuts boost low income earners disposable income, but at the low end of the scale will be worth $10 per week. A huge budget cost with very little return to the everyday Australian.
3. Housing & Property Market Measures
Help to Buy Scheme (Expanded)
- $6.3 billion total investment
- Government equity: Up to 40% for new homes, 30% for existing
- New income and price caps (e.g., $1.3M for Sydney)
Foreign Buyer Restrictions
- Two-year ban on foreign investors buying existing homes from April 1, 2025
- Compliance funding for ATO to enforce the ban
Construction & Innovation
- $54 million to boost modular and prefabricated housing
- $722.8 million for apprenticeships to address labour shortages
💡 LMS Insight: These changes could affect buyer competition and construction timelines—investors should consider emerging build-to-rent and modular projects. Foreign investors banned from the market leaves more opporunity for Australians to buy.
4. Cost of Living Relief for Investors & Tenants
- Energy rebates of $150 for households and small businesses extended through 2025
- PBS medicine costs cut, and Medicare thresholds lifted
- Childcare subsidies guaranteed for more families
đź’ˇ LMS Insight: These measures improve tenant affordability and may help support sustained rental demand.
5. Small Business Support
- $150 quarterly energy rebates for small business until end of 2025
- Instant asset write-off up to $20,000 for eligible purchases ends 30 June 2025
- ATO funding boost for compliance and anti-avoidance
đź’ˇ LMS Insight: If you operate a property business or hold property in a business structure, these incentives could ease your cashflow and reduce overheads. We wish there was more incentive here for business owners to grow and thrive. You’ll need to make it happen yourselves!
6. Superannuation & Wealth Strategy
- Payday super to commence from July 2026
- $3M super cap still pending Senate approval
- Managed investment trust changes confirmed
💡 LMS Insight: These reforms underscore the importance of long-term tax planning and wealth structuring—particularly for high net-worth investors. Business owners need to get ready for Payday Super next year and 12% super from 1 July 2025.
7. The “Future Made in Australia” Strategy
- Over $3 billion to support clean energy manufacturing and green metals
- Expanded incentives for hydrogen and critical minerals sectors
đź’ˇ LMS Insight: Expect to see flow-on effects in regional property markets tied to clean energy hubs or infrastructure development.
8. Summary for Property Investors and Business Owners
| Opportunity/Impact | Key Budget Measure |
|---|---|
| Reduce Cost of Living Pressure | Tax cuts, rebates, and childcare reforms |
| Market Demand Growth | Help to Buy scheme and housing investment |
| Reduced Buyer Pressure | Foreign buyer ban on existing homes |
| Construction Delays Eased | Apprenticeship and prefab funding |
| Business Cost Relief | Small business energy rebates, asset write-off |
| Future Uncertainty | Election timing may delay implementation |
Final Thoughts: While the Federal Budget presents a mix of certainty and speculation—particularly in a pre-election context—it offers investors both immediate operational relief and long-term signals. At LMS Advisory, we’re here to help you interpret these developments and unlock the potential behind your numbers to make strategic decisions with confidence.
đź“ž Ready to discuss what this budget means for your overall strategy?
Contact the LMS Advisory team today.
