1.0 2025/26 Federal Budget
2025/26 Federal Budget - Summary of key personal tax & superannuation measures
Note: Treasurer Jim Chalmers delivered the 2025/26 Federal Budget on Tuesday 25 March 2025 prior to the Labor Government's re-election on Saturday 3 May.
Personal income tax
In addition to the Stage 3 tax cuts that the Government legislated last year, the following new tax rates are proposed:
- from 1 July 2026, the 16% rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15%.
- from 1 July 2027, the 15% tax rate will be further reduced to 14%.
Taxable income thresholds effective :1 July 2025
• $18,200 - 0%
• $18,201 to $45,000 - 16%
• $45,001 to $135,000 - 30%
• $135,001 to $190,000 - 37%
• $190,001 plus - 45%
Low income offset.
The low income tax offset (LITO) remains unchanged.
The maximum amount of the LITO is $700. The LITO is withdrawn at a rate of five (5) cents per dollar between taxable incomes of $37,501 and $45,000 and then at a rate of 1.5 cents per dollar between taxable incomes of $45,001 and $66,667.
Note: Low and middle income tax offset (LMITO) ceased from 1 July 2022.
Medicare levy low-income thresholds
The Government has increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners by 4.7% for 2024/25.
- Singles threshold: up from $26,000 to $27,222.
- Family threshold: up from $43,846 to $45,907
- Single threshold for seniors and pensioners: up from $41,089 to $43,020.
- Family threshold for seniors and pensioners: up from $57,198 to $59,886
- For each dependent child: additional threshold up from $4,027 to $4,216.
Superannuation
Despite no major new superannuation measures announced in this Budget the following pre-announced changes come into effect on:
1 July 2025:
- Superannuation guarantee (SG) rate increases from 11.5% to 12.0%. This represents the current legislated peak rate for the SG.
- Nil Indexation to apply to the personal contribution caps:
Concessional cap (CC) = $30,000 (as for 2024/25)
Non-concessional cap (NCC) = $120,000 (as for 2024/25)
- Indexation of general transfer balance cap (TBC) from $1.9 million (2024/25) to $2 million
- Indexation of total super balance cap (TSB) from $1.9 million to $2 million
Superannuation on Paid Parental Leave
Superannuation will be paid on the 20 weeks of government-funded paid parental leave from 1 July 2025. Parents of babies born on or after 1 July 2025, will receive 12% SG contributions on top of their government-funded parental leave.
This addition of super payments to paid parental leave will come into effect at the same time that the paid parental leave timeframe increases to 24 weeks (from the current 22 weeks). This timeframe then increases again to 26 weeks in 2026.
1 July 2026:
Pay day superannuation arrangements
Employers will be required to pay their employees SG at the same time as their salary and wages (OTE).
As each time OTE is paid, there will be a new seven (7) day 'due date' for contributions to arrive in the employees' superannuation fund. This provides time for the movement of funds through the payment system, including clearing houses. An employer will be liable for the new SG charge unless SG contributions are received by their employees' superannuation fund within seven calendar days of payday.
Social Security - deeming rates
As deeming rates are usually reviewed on 1 July each year and changed at the discretion of the Minister, there was a lot of conjecture at Budget time whether they would remain frozen.
As the Budget made no announcement on the issue of deeming for financial investments, the rates will remain at their current levels while the deeming thresholds are indexed to CPI each year on 1 July.
| |
Thresholds (@ 1 July 2024) |
Lower deeming rate |
Upper deeming rate |
| Single |
$ 62,600 |
0.25% |
2.25% |
| Couple |
$103,800 |
0.25% |
2.25% |
Source: Rainmaker Technical Services
