Following its majority win in the 2025 Federal Election, the Australian Labor Party (ALP) has been returned to government. During the election campaign, the ALP outlined a range of tax and economic measures, some of which have already been legislated or announced as part of the 2025 Federal Budget.
Below is a summary of the key proposed changes and how they may affect individual taxpayers and small businesses, subject to legislative enactment.
- Personal Income Tax Rate Changes: From 1 July 2026, the marginal tax rate for income between $18,201 and $45,000 will reduce from 16% to 15%. A further reduction to 14% is scheduled to apply from 1 July 2027. These reductions have now been legislated and are expected to deliver savings of approximately $10 per week for an average income earner once fully implemented.
- Simplified $1,000 Deduction for Work-Related Expenses: The ALP has proposed a $1,000 standard deduction for work-related expenses from the 2026–27 income year. Taxpayers earning labour income will have the option to claim this fixed deduction in lieu of itemised expense claims. Where this option is selected, no substantiation (e.g., receipts) will be required for deductions under the $1,000 threshold.
- Extension of Instant Asset Write-Off for Small Business: Under the 2025 Federal Budget, the Government has proposed to extend the existing $20,000 instant asset write-off for eligible small businesses. Businesses applying the simplified depreciation rules (Subdivision 328-D of the ITAA 1997) will be able to immediately deduct the full cost of eligible assets valued under $20,000, provided the asset is first used or installed ready for use by 30 June 2026. This threshold applies on a per-asset basis, enabling multiple claims where applicable.
- Student Loan Debt Reductions and Repayment Threshold Increase: Effective from 1 July 2025, the Government will apply a one-off 20% reduction to student loan balances, including HELP, VET Student Loans and Australian Apprenticeship Support Loans. Additionally, the minimum income threshold for mandatory loan repayments will rise from $51,500 to $67,000 from the 2025–26 income year.
- Medicare Levy Threshold Increases: The Medicare levy low-income thresholds for individuals, families, and senior Australians will increase from 1 July 2024, as part of broader cost-of-living relief measures announced in the 2025 Budget.
Other Announced Measures
- Energy Bill Relief: From 1 July 2025, eligible households will receive $150 in energy bill rebates ($75 per quarter), with payments continuing through to 31 December 2025.
- Home Guarantee Scheme Expansion: The ALP has proposed to expand access to the Home Guarantee Scheme to all first home buyers, allowing purchases with as little as a 5% deposit. The current eligibility restrictions will be removed.
If you would like tailored advice regarding any of the above proposals, please contact our office. We are here to assist you in understanding how these measures may apply to your personal or business circumstances.
