Federal budget 2025: Tax cuts for Australians, see what you’ll get

These tax cuts won’t cover the thousands of dollars of extra tax paid by millions of workers where rising wages push people into higher tax brackets. Use our calculator to see what you’ll get.

Tax cuts for every household are headlining Labor’s budget for the second year running, but don’t get too excited.

The first cut of $268, delivering just over $5 a week to a typical worker, won’t come until July 2026, so the government claiming that it helps with the cost of living sounds a bit rich.

The second cut is the same size, but doesn’t arrive until July 2027.

Treasurer Jim Chalmers admits “these additional tax cuts are modest but will make a difference”. It’s more like pre-election window dressing instead of serious tax reform.

Budget initiatives such as cheaper medicines, more bulk billing, significant cuts to student debt and free TAFE are likely to deliver much bigger financial benefits to those who can obtain them. Picture: NewsWire/ Scott Gelston

These cuts won’t cover the thousands of dollars of extra tax paid by millions of workers in recent years through bracket creep, where rising wages push people into higher tax brackets.

Similarly, the six-month extension of electricity bill rebates for every household and small business – totalling $150 rather than last year’s $300 – won’t cover the hundreds of extra dollars annually most Aussies are paying for their power.

Tweaks to the Medicare Levy low-income threshold will deliver a small number of households some extra relief, but all of the fresh handouts combined have less financial impact than a typical single interest rate cut.

Other budget initiatives such as cheaper medicines, more bulk billing, significant cuts to student debt and free TAFE are likely to deliver much bigger financial benefits to those who can obtain them.

KPMG chief economist Brendan Rynne, who carried out the modelling, said it was a budget set up for the looming federal election. Picture: Supplied

Speaking from budget lockup, KPMG chief economist Brendan Rynne, who carried out the modelling, said it was a Budget set up for the looming federal election.

“This is a budget that is politically savvy but economically questionable,” Dr Rynne said.

“Theoretically budgets are supposed to be the government’s blueprint for the financial management of the nation, but this budget is clearly the launch pad for the upcoming election, sweetening cost-of-living measures but doing so on the nation’s credit card,” he said.