What the 2025 federal budget means for you

Treasurer Jim Chalmers has handed down the fourth federal budget of his time in government, paving the way for an election campaign that could be announced in the coming days.

In a surprise move, the government announced a new round of tax cuts. The first marginal tax rate will be reduced from 16 to 14 per cent over two years, starting from 1 July 2026.

This means all taxpayers earning over $18,200 will get a $268 tax cut in 2026-27, which becomes $536 a year from 2027-28. Most of this tax cut will go to the almost nine million workers earning between $45,000 and $135,000 per year.

The budget notes signposted global uncertainty, however in Australia, growth has rebounded, inflation has moderated, unemployment is low, and real wages are growing.

A deficit of $42.1 billion is forecast for 2025-26, while gross debt is $177 billion lower in 2024-25 than forecast at the Pre-Election Fiscal Outlook (PEFO). Economic growth is expected to be 1.5% in 2024-25, 2.25% in 2025-26 and 2.5% in 2026-27.

Similar to the 2024 budget, energy bill relief again features prominently; the government will extend rebates on electricity bills by six months, providing a $150 cut to power bills for households and small businesses.

These rebates will be automatically applied to every household and around 1 million small businesses from July 1, and paid over two quarterly instalments.

Ahead of the budget, MYOB research found SMEs had hoped to see reduced cost pressures and support for cashflow prioritised. Some of the measures mid-sized businesses were focused on included access to finance, innovation and digitisation, as well as support for cybersecurity.

Key takeaways from the budget

• SME takeaways
• Mid-sized business takeaways
• Cost of living support
• Taxation relief
• Focus on healthcare (Medicare bulk billing and PBS funding)
• Education (Schools funding and student debt relief)

What’s in it for SMEs

Small businesses didn’t see a lot in this budget, however, for certain businesses, some cost-of-living woes may be aided by support that includes:

• Prompt 20-day payment times for construction industry contractors/subcontractors who complete work for Government Business Enterprises undertaking major construction activity (e.g., the NBN and Western Sydney Airport projects)
• A pause of indexation on draught beer excise and excise equivalent customs duty rates for alcohol producers and the hospitality sector
• An increase in support available under the current excise remissions scheme for alcoholic beverage manufacturers
• A Wine Equalisation Tax Producer rebate, that’s estimated to lower receipts by $165 million over five years
• The provision of $18 million for creditor assistance payments to support eligible businesses affected by the Whyalla Steelworks administration
• Energy bill relief, as listed below
• Government has committed to spending $20 million on a “Buy Australian” campaign in 2025/26 to encourage Australians to buy locally-produced goods and services
• The Government is also going to help Australians have more scope to become entrepreneurs and earn more each year by banning the use of non-compete clauses for low- and middle-income workers who earn less than the high-income threshold ($175,000 currently)

What the budget means for mid-sized businesses

While there were few standout measures targeting mid-sized businesses, this year’s budget outlines national priorities and hints at where the federal government sees future growth.

Key takeaways for mid-sized businesses

• Return to Deficit: The government forecasts a $26.9 billion deficit for 2025-26, marking a shift from two consecutive budget surpluses. Rising structural expenses in areas like health, aged care and defence underpin this return to red ink.
• A $20 million “Buy Australian” advertising campaign that will encourage consumers to support local businesses amid the uncertainty of global trade wars and US tariffs.
• Clean Industry Focus: $2 billion in production credits for green aluminium manufacturing.
• Defence & Infrastructure Investment: More than $10.6 billion in additional defence spending and $7.2 billion for Queensland’s Bruce Highway demonstrate continued focus on national resilience and construction-led stimulus.

Cost of living/energy bill relief

Households and small businesses will get an extra round of energy bill relief. There will be $150 wiped off power bills for the final six months of this year, which will help reduce consumer costs by 7.5 per cent, at a cost of $1.8 billion to the budget.

This energy bill relief includes the rebates that have already been paid to households and small businesses. When combined with last year’s budget, this is up to $800 for eligible small businesses.

Tax cuts

• Medicare levy low-income thresholds will be increased (at a cost of $648m)
• $17.1b in new tax cuts for every taxpayer

Healthcare

There has been an increased, pre-election focus on healthcare announcements:

• Maximum price for a PBS prescription will be $25 ($7.70 for concession card holders)
• $8.5b for Medicare (improve bulk billing rates – 9/10 GP visits should be bulk billed by the end of the decade)
• Funding for more urgent care clinics, women’s health and public hospitals

Skills and Education

Construction and apprenticeships will get $722.8m over four years (this is not new funding), including:

• Expansion of the New Energy Apprenticeships Program. It will be renamed and expanded to capture critical residential construction occupations
• Increase to the Living Away From Home Allowance
• Doubling the current maximum incentive payments for eligible housing construction apprentices from $5k to $10k.

MYOB’s verdict

The 2025 federal budget measures encouraging consumers to “Buy Australian”, alongside cost-of-living assistance in tax cuts and energy supports, will flow through to the nation’s small businesses and mid-sized enterprises.

However, continued and consistent support will be necessary to energise the business communities that, combined, contribute half of the nation’s GDP.

MYOB CEO Paul Robson says while some of the latest budget measures will help the business community, additional measures, such as future certainty around the instant asset write off, would have been welcomed.

“As a homegrown Australian business ourselves, to see support for our local SMEs filter through in these cost-of-living measures is encouraging,” he says.

“Supporting local operators is an important agenda item for the government, the economy and Australian consumers.

“Small businesses continue to face economic headwinds. With utility costs, fuel prices, and concerns about price margins and profitability topping their list of pressures, these targeted measures will alleviate some of the financial strain they’re experiencing.

“The success of our small and mid-sized business community is intrinsically linked to our nation’s economic prosperity. By addressing their key concerns around cost pressures, cashflow management, and investment support, the government would help to create an environment where these businesses can thrive in 2025 and beyond.”

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Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.