The proposed budget for 2025 comes with new tax cuts for individuals, reducing student debt and further restrictions on foreign ownership of housing.
Individual income tax cuts
Under the new tax cuts, it is proposed that the $18,201 - $45,000 threshold will be lowered:
- the (current) 16% tax rate will be reduced to 15% from 1 July 2026; and
- the 15% tax rate will be further reduced to 14% from 1 July 2027.
This benefits all taxpayers.
Making student loans fairer
As previously announced by the Prime Minister on 3 November 2024, the Government will reduce all outstanding Higher Education Loan Program (‘HELP’) and other student debts by 20%, subject to the passage of legislation. The 20% reduction is in addition to the recent indexation reforms. The Government is also increasing the amount that people can earn before they are required to start paying back their loans, from $54,435 in the 2025 income year to $67,000 in the 2026 income year.
Restricting foreign ownership of housing
The Government will take action to ensure that foreign investment in housing supports the Government’s broader agenda to boost Australia’s housing supply by banning foreign persons (including temporary residents and foreign-owned companies) from purchasing established dwellings for two years from 1 April 2025, unless an exception applies.
Conclusions
Perhaps most importantly is what is not in this budget: relief for small business. For example, there is currently no planned continuation of the instant asset write-off for business, which ends on 30 June 2025. While income tax cuts are a welcome surprise along with other cost of living measures that were announced, these temporary measures will not solve the economy's underlying issues. Only initiatives such as a reduction of red tape and workplace reforms, will improve productivity and grow the economy and the overall tax base and in turn, resolve the need for many of the temporary cost of living measures being announced.