Federal Budget 2025: Quick five-minute guide, how it affects you

As Treasurer Jim Chalmers prepares Australia for the future, he has offered two tax cuts and cost of living sweeteners to voters. But there are grim warnings. Here’s how the budget affects you.

Jim Chalmers’ fourth Budget as Federal Treasurer both sets the scene for the upcoming election and responds to some of the challenges facing the global economy.

Dr Chalmers has attempted to deliver a Budget that reinforces a message that Labor can be trusted to steer the economy in turbulent times, at the same time as offering two tax cuts and cost of living sweeteners to voters that will prove both (a) useful; and (b) memorable on election day.

The Budget reveals the deficit next year will be $42 billion, and gross debt is expected to be $940 billion at the end of the 2024/25 financial year - a record sum, but lower, the government said, than the $1.1 trillion it was forecast to be at the 2022 election.

Dr Chalmers said “the worst is behind us and the economy is now heading in the right direction” - but there are grim warnings about the future, with economic growth restricted to one and a quarter per cent next year, and unemployment tipped to rise slightly, and peak at four and a quarter per cent.

Here’s what the 2025/26 Budget means for you.

Dr Chalmers has said “the worst is behind us and the economy is now heading in the right direction”. Picture: Supplied

COST OF LIVING

- $1.8b for energy bill relief for families and small businesses, who will get $150 wiped from their bills for the second half of this year, in a limited extension of the current rebate scheme

- $689m for cheaper medicines on the Pharmaceutical Benefits Scheme. Currently, some 900 medicines (5000 different brands) are listed on the PBS, and the cost of 80 per cent of them will be cut from $31.50 to $25. The cost will stay the same for pensioners

- $16b for the student debt to be partially wiped for three million people from July 1

- $8.5b for GPs to be incentivised to bulk-bill 18 million more sessions

- $427m to enable more families to access three days of subsidised child care per week, starting 1 January 2026. Only families earning more than $533,280 will not be eligible

HEALTH

- $644m to open 50 more Medicare urgent care clinics

- $793m package aimed at women’s reproductive health and menopause, including new PBS medicines for contraception, menopause and endometriosis

- $1.8b to list more medicines on the PBS

- A new incentive program for junior doctors to become GPs

- $7.9bn to make nine out of 10 GP visits bulk billed by 2030

- $1.8bn funding boost to public hospitals

- 50 additional Medicare Urgent Care Clinics, bringing the total to 137 nationwide

- $662.6m to grow the workforce of doctors and nurses

There will be $2.6b for increased wages for 60,000 aged care workers. Picture: iStock

AGED CARE

- $2.6b for increased wages for 60,000 aged care workers

The Budget has allocated $33b to help build 1.2 million new homes before 2030. Picture: Supplied

HOUSING

- $33b to help build 1.2 million new homes before 2030

- $800m to extend the government’s Help to Buy housing scheme. New income and property price caps will help 40,000 people/couples over the next four years into the market

- $49.3m to encourage states and territories to lift construction of prefabricated and modular homes

- Foreign buyers will be banned from purchasing existing homes for two years from 1 April

EDUCATION

- $1.6b will pay for fee-free TAFE for 100,000 places between 2027 and 2035

- $1b set aside for the Building Early Education Fund

TAX

- $17b will pay for two tax cuts in 2026 and 2027, to top up the cuts delivered last year. This means the average earner will have an extra $536 in their pocket annually. Combined with last year’s cuts, the average total tax cut will be $2548, or about $50 a week. The Medicare levy low-income thresholds will also be increased, which means lower income earners will save money

- $200m for the freezing of the alcohol excise, specifically for draught (kegged) beers, for two years from August

SOCIAL SECURITY

- The freezing of deeming rates for pensions at 2.25 per cent is set to continue for another year

$650m for new long-range missiles has been allocated in the budget for Defence. Picture: CPL Janet Pan

DEFENCE

- $650m for new long-range missiles

- $262 to strengthen supply chains linked to AUKUS

- $272m for new radar quipment

- $45m boost for Australia’s spy agencies

- Defence spending to be 2.1 per cent of GDP in 2025/26 and reach 2.3 per cent during the 2030s - well below the 3 per cent targets demanded by US President Donald Trump

NDIS

- An extra $151m for detecting NDIA fraud

- Payments expected to drop by $954m within the next financial year, which will equate to an estimated decrease of $3.9bn over the next five years

SOCIAL ISSUES

- $4bn to address gender-based violence

- $423.8m to support people with disability

PUBLIC SERVICE

- $720m to be saved by slashing the amount the Public Service spends on external consultants 

INDIGENOUS

- $1.3b for Closing the Gap initiatives

- $842.6m to support critical services in remote First Nations communities in the Northern Territory

There will be an additional $80m of funding for the Reef Wise Wetlands Program and the Reef Wise Urban Program. Picture: Supplied

ENVIRONMENT

- $1.2b to fund recovery from Cyclone Alfred

- $250m for the Saving Austrlia’s Bushland Program, bringing 30 per cent of Australian land under protection

- An additional $80 million of funding for the Reef Wise Wetlands Program and the Reef Wise Urban Program

There will be an extra $2b for the Clean Energy Finance Corporation. Picture: AFP

INDUSTRY

- $3b to support the production of Australian made green metals such as aluminium and iron

- $3bn for fibre optic cable upgrades to the NBN

- ‘Non compete’ clauses for most workers to be abolished

- $20m to encourage consumers to Buy Australian

- $7.1m for new franchising code of conduct

- Key apprentice program to incentivise tradies to complete their apprenticeships, with five payments of $2000 bonuses

- Extra $2b for the Clean Energy Finance Corporation

- Almost $300m in assistance to deal with collapse of Whyalla steelworks

MAJOR PROJECTS

- $7bn for Queensland’s Bruce Highway between Brisbane and Cairns

- $1bn for amissing rail link between Sydney’s southwest and Western Sydney airport.

- $1.3b for other projects in Western Sydney

- $2bn for upgrades at Sunshine Station servicing Melbourne Airport

- $75m for two intersection upgrades in SE Melbourne seat of Dunkley

LABOR

- $8.5bn to triple the bulk billing incentive for all Australians, boost GP workforce

- $573m for women’s health

- Lower cost of PBS scripts to no more than $25 from January

- Cut 20 per cent of all HECS student loans

- Three days of childcare guaranteed to families

- Fee-free TAFE made permanent

- ‘Future Made in Australia’ sovereign manufacturing incentives

- $644m for 50 new Urgent Care Clinics

- $3bn for fibre optic cable upgrades to the NBN

- Two-year tax freeze on draught beer excise

Labor has promised that there will be three days of childcare guaranteed to families. Picture: iStock

COALITION

- $331bn to build seven nuclear reactors across Australia by 2050

- $5bn to fund infrastructure to support 500,000 new home builds

- Drop permanent visas for two years, from 185,000 annually to 140,000

- Allow Australians to access $50,000 of their superannuation to buy a first home

- $20,000 tax deduction scheme for small businesses spending on meal and entertainment

- Increasing Medicare-subsidised psychological sessions from 10 to 20

- Scaling back offshore wind projects

- Raise small business instant asset write off to $30,000 and make it permanent

- Two-year tax freeze on draught beer excise

- Match Labor’s $8.5bn bulk billing, $25 PBS scripts and $573m women’s health pledges

- Deregister the CFMEU and re-establish the Australian Building and Construction Commission

Originally published as Federal Budget 2025: Quick five-minute guide, how it affects you