The government will deliver tax cuts for millions of workers but strip billions from disability services in a budget that creates clear winners and losers.
Jim Chalmers has handed down his fifth federal budget, which he says is “the most important and ambitious budget in decades” amid tough economic conditions.
Here are the winners and losers.
WINNERS
TAXPAYERS (WITH A CATCH)
All Australian workers will get $250 back as part of an “earned income offset” but won’t get the cash until next financial year. Personal tax rates announced in last year’s budget will come into force with the lowest tax bracket (for those earning between $18,201 and $45,000) dropping from 16 per cent to 15 per cent, saving those earning $45,000 a year $268 in tax. The Medicare levy threshold will also be retrospectively adjusted for the current tax year, from $27,222 to $28,011 for singles and from $45,907 to $47,238 for couples.
HOME BUYERS
Extra $2bn for critical infrastructure – such as roads, water, power and sewerage – as part of efforts to propel housing construction. The Local Infrastructure Fund will support up to 65,000 homes built over the next decade. Funding will go to local governments and state utility providers, with $500m reserved for regional Australia. A further $500m will also be spent on speeding up approvals for housing, energy, and critical minerals projects. That includes $105.9m over four years to provide better access to information, including through the use of artificial intelligence.
The government is adding $2bn for critical infrastructure to support the construction of more housing. Picture: NewsWire / Gaye Gerard
MOTORISTS
There will be $10bn towards bolstering Australia’s fuel security and resilience, with $7.5bn towards providing financial support for the supply of fuel and fertiliser, including loans, equity, guarantees, and insurance.
Another $3.2bn would fund an onshore fuel security reserve, and the minimum stockholding obligation will also be raised to increase Australia’s critical fuel reserves to 50 days.
Around $10m will be poured into feasibility studies examining “new expanded refinery capabilities”; these would be co-funded with state and territory jurisdictions, with at least one proposal already set to receive joint funding.
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TRUCKIES
Heavy vehicle road user charge reduced from 32.4 cents per litre to zero for three months, at a cost of $350m over the financial year.
THE SICK
An extra $1.8bn over five years from 2025-26 and $525.6m a year ongoing from 2030-31 to fund Medicare Urgent Care Clinics. The clinics are a flagship health policy of the government and offer walk-in and bulk-billed urgent care. Those with cystic fibrosis, chronic kidney disease and various cancers, to benefit from cheaper medicines listed on the Pharmaceutical Benefits Scheme thanks to $5.9bn provided over five years. An additional $2.8m over two years to continue support for Endometriosis and Pelvic Pain Clinics to provide specialist care for women experiencing endometriosis, pelvic pain, perimenopause and menopause, and
an additional $13.1m over three years to improve understanding of the causes of stillbirth, provide support to grieving families and prevent future occurrences.
Prime Minister Anthony Albanese with Member for Dickson Ali France during a news conference at the Medicare Urgent Care Clinic, Murrumba Downs. Picture: Liam Kidston / Newswire
ADULT TEETH
For the first time, the Government will permanently fund the Public Dental Services for Adults agreement to support the delivery of dental services to eligible adult patients, providing $431.0m (and $107.8m per year ongoing).
YOUNG AUSTRALIANS
A total of $59.4m over four years will provide states and territories with funding to supplement rental income for community housing providers supporting young people. This will support stable housing for over 4000 young people aged 16 to 24 who are at risk of or experiencing homelessness.
OUR NATION
Defence spending will increase by more than $53bn over forward estimates in the next decade, funded partly by the sale of valuable military land. Total funding across defence will be at $887bn, with about $425bn allocated funding for defence capabilities set out in the 2026 Integrated Investment Program – an increase of more than $150bn since 2020.
BUSINESSES AND TRADIES
A tax rebate which gives small businesses and tradies a cash flow boost by allowing them to immediately deduct the cost of eligible assets will be made permanent. The instant asset tax write-off was bumped up from $1000 to $20,000 but this was due to revert back at the end of the financial year. It will now be made permanent, allowing assets costing less than $20,000 to be claimed in full in a tax return. $1bn in interest-free loans for manufacturing and logistics businesses
UKRAINE
Goods coming from Ukraine will be exempt from duty levees for another two years in response to Russia’s ongoing invasion. The measure is expected to reduce Australia’s tax take by $2m over five years from 2025-26.
INDIA
More than $25.3m will be provided over four years from 2026-27 for the next phase of the India-Australia Comprehensive Strategic Partnership, including maritime co-operation and the Maitri Grants program and Fellowships program.
LOSERS
INVESTMENT PROPERTY OWNERS
The 50 per cent capital gains tax discount axed in favour of inflation indexation across all asset classes, but investors will be given a one-year grace period before the pre-1999 regime kicks in. A clamp down on negative gearing, restricting the tax break to newly built homes from July next year.
TRUSTEES
Those holding discretionary trusts will be hit with a new 30 per cent minimum tax rate, payable by the trustee. These were previously taxed at the recipient’s marginal tax rate.
THOSE ON THE NDIS
About $15bn will be cut from the NDIS over the next four years under sweeping reforms. The changes will target “scheme inflation” and crack down on eligibility requirements. The reforms would reduce the scheme’s cost to $55bn over forward estimates instead of more than $70bn in 2030, as current projections show. The changes will also result in about 160,000 people removed from the scheme by the end of the decade.
Tax discount exempting electric vehicles from Fringe Benefits Tax will be wound back next year, saving the government $1.7bn over four years. Picture: Sarah Marshall/ NewsWire
ELECTRIC VEHICLE OWNERS
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Tax discount exempting electric vehicles from Fringe Benefits Tax will be wound back next year, saving the government $1.7bn over four years. From April 2027, the full discount will only apply to electric vehicles costing less than $75,000. Those above that threshold will be taxed at 75 per cent of the usual rate of FBT. From April 2029, all electric vehicles will be taxed at that 75 per cent payable FBT rate.
OLDER AUSTRALIANS WITH PRIVATE HEALTH INSURANCE
More than three million older Australians – including 400,000 pensioners – with private health insurance hit by cuts to the private health insurance rebates. Those aged between 65 and 69 earning under $100,000 as a single or $202,000 as a family, the rebate will be reduced from 28 per cent to 24 per cent, while those aged 70+ will have the rebate reduced from 32 per cent to 24 per cent.
