How the budget affects you – from students to retirees

Australians saddled with rising health costs, power bills and mortgage repayments are the target of Treasurer Jim Chalmers’ fourth budget, as Labor prepares its selling points for a federal election campaign that will be fought over the cost of living.

Financial help will be modest and targeted as the budget heads into deficit. New income tax cuts for all Australians will give everyone a sweetener, but the bulk of the budget’s assistance will go towards middle Australians.

These are the working people who have been struggling financially but missed out on previous rounds of financial assistance channelled towards the most vulnerable. They are also voters in marginal seats where the election will be won.

Here’s what the budget means for you.

The budget is a big document. We break it down for different demographics. Credit: Marija Ercegovac

Students and young people

• Student loans will become cheaper and easier to pay off. Tradespeople and university graduates will have 20 per cent of their loans wiped. Monthly repayments will shrink and the threshold for when people need to start paying off loans will rise.
• Fee-free TAFE will become permanent, with 100,000 covered places every year from 2027 – there’s $1.6 billion to fund these places until 2035.
• Young women will have better access to reproductive healthcare, with $400 subsidies for long-acting contraceptives and pills Yaz, Yasmin and Slinda added to the Pharmaceutical Benefits Scheme for the first time.
• The threshold for when people need to start paying the Medicare levy will lift by 4.7 per cent for lower-income earners.

Young families and first home buyers

• Thousands more Australians will be eligible for the Help to Buy scheme in which the government contributes up to 40 per cent of the purchase price. Income caps rise from $90,000 to $100,000 for singles, and from $120,000 to $160,000 for joint applications, while the maximum purchase price in each city will also rise to reflect higher home prices.
• The government’s new three-day childcare guarantee will mean parents no longer have to work or study to get subsidised childcare. The budget papers say this will boost take-home pay for parents who are secondary earners and choose to work three days instead of two.
• Young families will also benefit from the government’s key cost-of-living measures: income tax cuts for all taxpayers, cheaper medicine co-payments, incentives for GPs to bulk-bill their adult patients, and $150 energy bill relief until the end of the year.
• Fifty new urgent care clinics across the country will provide walk-in free care for families whose children need medical attention but aren’t sick enough for the emergency department.

Middle-income earners

• Income tax cuts will lower the first marginal tax rate from 16 per cent to 14 per cent over two years, from July 2026. A worker on average earnings ($79,000) will get a tax cut of $268 in 2026-27, and a further cut of $268 a year from 2027-28.
• An extra round of energy bill relief will wipe $150 from household power bills in the final six months of this year. The $75-a-quarter discount will be automatically applied.
• The maximum co-payment for subsidised medicines will be reduced from $31.60 to $25, while all adults will for the first time be eligible for bulk-billing incentives paid to GPs when they don’t charge patients anything extra.
• Workers earning less than $175,000 will no longer be subject to non-compete clauses. The government will ban these under the Fair Work Act, allowing workers to seek higher wages with a competing business or start their own enterprise. The budget says that this could raise wages by 4 per cent, or $2500 per person.
• Public school funding will increase. The federal government has signed agreements with all states and territories to lift Commonwealth support from 20 per cent to 25 per cent of a school’s resourcing standard.

Wealthy people and retirees

• The wealthiest Australians will share in the $150 energy bill relief and cheaper subsidised medicines – cost-of-living measures that have not been means-tested. They will also receive the small income tax cuts from lifting the first marginal tax rate.
• Government spending on older Australians has surpassed $100 billion for the first time, between the aged pension and aged care services, now making up 13 per cent of the budget.

Tradies and small businesses

• Businesses will benefit from the $150 energy bill relief, applied until the end of this year.
• Hospitality venues, brewers, distillers and wine producers will get $165 million in tax relief, including a two-year freeze on the indexation of the draught beer excise.
• A $20 million “Buy Australian” advertising campaign will encourage shoppers to support local businesses.
• There has been $56.7 million allocated to small businesses under the Energy Efficiency scheme, with grants up to $25,000 to replace inefficient appliances such as gas heaters with heat pumps.
• Extra incentives will be paid to apprentices who go into housing construction (from $5000 to $10,000).
• The competition watchdog has received $38.8 million to boost enforcement of anticompetitive behaviour in the supermarket and retail sectors. There is also funding to help small businesses negotiate with big supermarkets.

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