Labor has promised to deliver two tax cuts starting from next year that will offer ‘hip pocket help for households’ but come at a cost of $17.1billion in a desperate bid to woo voters ahead of the impending federal election.
Treasurer Jim Chalmers handed down the Budget on Tuesday night with a raft of cost-of-living measures designed to appeal to battling Aussies in a last-ditch, pre-election pitch.
These include two tax cuts, a $150 extension to the energy rebate, promises to make nine out of ten visits to the GP free, wiping $19billion from existing student debt, banning non-compete clauses and billions set aside for major infrastructure projects.
But much of the spending was already known in advance as Labor had never planned to hand down this Budget.
That was until ex-Tropical Cyclone Alfred blew in, punching a $1.2billion-sized hole in the government coffers.
And now, after two consecutive Budget surpluses, Labor has returned a ballooning deficit of $42.1billion by the next financial year, with no return to surplus in sight amid a sea of red ink.
But Dr Chalmers insisted the Budget was governed by ‘responsible economic management’, as he claimed his focus was bringing ‘more hip pocket help for households’ doing it tough right now.
‘The cost-of-living is front of mind for most Australians and it’s front and centre in this Budget,’ the Treasurer said.
Treasurer Jim Chalmers handed down the Budget on Tuesday night with a raft of cost-of-living measures designed to appeal to battling Aussies in a last-ditch, pre-election pitch (Dr Chalmers is pictured with Finance Minister Katy Gallagher)
Dr Chalmers insisted the Budget was governed by ‘responsible economic management’, as he claimed his focus was bringing ‘more hip pocket help for households’ doing it tough right now
‘We know the welcome improvements in the aggregate numbers don’t always immediately translate to how people are feeling and faring.
‘We’ve made a lot of progress together but we know many people are still doing it tough.
‘Our plan to rebuild living standards starts with cost-of-living help and wages growth.’
Prime Minister Anthony Albanese is yet to call an election but it must be held on or before May 17.
Read on for Daily Mail Australia’s extensive Budget guide outlining the biggest winners and losers – and what it means for you.
If you pay tax…
The Government has promised to build on their stage three tax cuts announced at last year’s budget by offering two additional cuts in 2026 and 2027.
From 1 July 2026, the 16 per cent tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15 per cent – up to $268.
And from 1 July 2027, this tax rate will be reduced further to 14 per cent – up to $536.
Australia’s tax system is progressive, meaning that all 14 million of the country’s taxpayers will benefit from these cuts.
From 1 July 2026, the 16 per cent tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15 per cent – up to $268
Australia’s tax system is progressive, meaning that all 14 million of the country’s taxpayers will benefit from these cuts
Combined with the stage three tax cuts, the average tax cut is expected to be around $43 per week or more than $2,200 in 2026-27, and around $50 per week or more than $2,500 in 2027-28.
‘This will take the first tax rate down to its lowest level in more than half a century,’ Dr Chalmers said.
‘These additional tax cuts are modest but will make a difference.
‘The average earner will have an extra $536 in their pocket each year when they’re fully implemented.’
The promised tax cuts will cost $17.1billion over the next four years.
The Government will also increase the Medicare levy low-income thresholds by 4.7 per cent for singles, families, and seniors and pensioners from 1 July this year.
This means over one million Australians on lower incomes will continue to be exempt from paying the Medicare levy or pay a reduced levy rate.
If you’re struggling to pay the bills…
In 2022, the Albanese government made an election commitment to reduce household energy bills by $275 – a promise which has not been achieved.
But in last year’s budget they introduced a $300 energy rebate for every Australian, regardless of their income.
They will now extend this energy rebate, so everyone in Australia and around one million small businesses will receive two automatic $75 rebates directly off their electricity bills through to 31 December 2025.
The non-means tested rebate, which will cost an additional $1.8billion on top of the nearly $5billion already spent, is expected to reduce electricity bills by 7.5 per cent.
If you need to pick up a prescription…
Medicines will also be cheaper under new plans announced by Mr Albanese last week to reduce the cost of all scripts under the Pharmaceutical Benefits Scheme.
From 1 January 2026, the maximum co-payment will be lowered from $31.60 to $25 per script and remain frozen at $7.70 for pensioners.
The last time that PBS medicines cost no more than $25 was over 20 years ago.
If you need to see a doctor…
The Albanese government has already unveiled a massive $8.5billion promise to overhaul Medicare, including $7.9billion to increase bulk-billing incentives.
The policy was quickly matched by the Coalition, which promised to devote $9billion to reforming Medicare if they are elected in May.
The Labor government estimate their policy will make nine out of ten visits to the GP free by 2030 – and 4,800 bulk billing practices across the country by the same deadline.
The Albanese government has already unveiled a massive $8.5billion promise to overhaul Medicare, including $7.9billion to increase bulk-billing incentives, which they hope will ensure that nine out of ten visits to the GP will be free by 2030
A further $644million has also been announced to open an extra 50 Medicare urgent care clinics, bringing the total to 137 nationwide.
Labor estimates that this will mean four in five Australians will live within 20 minutes of a Medicare urgent care clinic.
Meanwhile, an additional $1.8billion has been earmarked for public hospitals.
If you are a women struggling with menopause, endometriosis or reproductive issues…
Dr Chalmers has committed to delivering a $793million women’s health package.
This will see new menopausal hormone therapies added to the PBS after more than 20 years, benefiting 150,000 women each year.
It will also help build 11 more endometriosis and pelvic pain clinics, with the services of all 33 clinics expanded to include specialised support for menopause and perimenopause.
Dr Chalmers has committed to delivering a $793million women’s health package in a bid to encourage women to vote Labor
‘This funding will help Australian women save on contraception, access more endometriosis and pelvic pain clinics, and receive better support through menopause,’ Dr Chalmers said.
‘Because for our Government, women’s health is not a boutique issue or a question of special interest – it is a national priority.’
If you are struggling with childcare costs…
From January 2026, the Government is promising to replace the Child Care Subsidy activity test with a new Three Day Guarantee. The $426.6million pledge will guarantee eligibility for at least 3 days a week of subsidised early childhood education and care for every Australian family
From January 2026, the Government is promising to replace the Child Care Subsidy activity test with a new Three Day Guarantee.
The $426.6million pledge will guarantee eligibility for at least three days a week of subsidised early childhood education and care for every Australian family.
In its first full financial year, the Three Day Guarantee is expected to result in 100,000 families being eligible for additional hours of subsidised early childhood education and care.
They are also committing $1billion to establish the Building Early Education Fund to increase the supply of high-quality early childhood education and care places across Australia.
It is expected to support 160 new or expanded early childhood education and care services in areas of need, including the outer suburbs and regional Australia.
Labor is also investing $3.6billion to support a historic wage increase for the early childhood education and care workforce.
This is delivering a 10 per cent increase relative to modern award rates from December 2024 and will provide a further 5 per cent from December 2025, raising the salaries of around 200,000 people.
As with aged care, it will primarily benefit women who make up around 92 per cent of the early childhood education and care workforce.
Labor is also investing $3.6billion to support a historic wage increase for the early childhood education and care workforce
If you’re looking to move jobs…
The Government will ban non-compete clauses for low and middle-income workers, because research suggests it could lift wages of affected workers by up to 4 per cent or $2,500 per year and boost GDP by as much as $5billion.
Dr Chalmers said the clauses were ‘holding too many Australians back from switching to better, higher-paying jobs’.
‘More than 3 million Australians are captured by these clauses, including childcare workers, construction workers and hairdressers,’ he added.
‘People shouldn’t need to hire a lawyer to take the next step in their career. Or permission from their old boss if they want to be their own boss, and turn an idea into a small business.’
The Government will ban non-compete clauses for low and middle-income workers, because research suggests it could lift wages of affected workers by up to 4 per cent or $2,500 per year and boost GDP by as much as $5billion
If you have student debt…
A combined $19billion will be wiped from existing student debt.
The Government is promising to reduce all outstanding Higher Education Loan Program (previously called HECS) and other student debts by 20 per cent, wiping $16billion in debt from the accounts of three million Australians.
This is in addition to recent reform to make indexation fairer for repayments, which has already decreased student loan debt by $3billion.
The Government will also increase the amount that people can earn before they are required to start paying back their loans from $54,435 in 2024–25 to $67,000 in 2025–26.
If you’re an aged care nurse…
An investment of $2.6billion for further pay rises for 60,000 aged care nurses from 1 March 2025 has also been promised, bringing the total investment in wage increases in the sector to almost $18billion.
The government claims these increases will particularly benefit women, who make up 86 per cent of the aged care workforce.
Dr Chalmers said the funding was designed ‘so the workers we trust to care for our parents and grandparents get paid properly for the work they do’.
If you like to drink beer…
The Albanese Government promised the Budget would confirm freeze in the excise indexation increases on draught beer for two years.
The measure, which is estimated to cost taxpayers $200million in lost tax revenue, should mean that the price of a schooner remains the same.
The Albanese Government promised the Budget would confirm freeze in the excise indexation increases on draught beer for two years
Mr Albanese described it as a ‘common sense measure’ that was ‘good for beer drinkers, good for brewers and good for pubs’.
Treasurer Dr Chalmers was more circumspect, previously calling it a ‘modest change’.
If you are stressed out by supermarket prices and car surcharges…
The Government has signalled that it is ‘prepared to ban debit card surcharges’.
But this measure is subject to further work by the Reserve Bank and safeguards to ensure small businesses don’t lose out.
The Government is also boosting funding for the consumer watchdog, the Australian Competition and Consumer Commission (ACCC), to the tune of almost $38million.
‘We know that Australians are still under pressure, and a lot of that pressure is felt at the checkout,’ Mr Chalmers said.
‘That’s why we’re cracking down on the supermarkets. By empowering the competition watchdog, making the Food and Grocery Code mandatory, increasing penalties and boosting competition.’
The Government is also boosting funding for the consumer watchdog, the Australian Competition and Consumer Commission (ACCC), to the tune of almost $38million to defend consumers against steep prices in big supermarkets
But the Government has promised just a paltry $2.9million over three years to help suppliers ‘stand up to the big supermarkets’ under the code, after a damning recent report by the ACCC into Coles’ and Woolworths’ duopoly.
The review, which called for a raft of changes including action on shrinkflation, found that Coles and Woollies were the most profitable supermarkets in the world.
The government has also committed $240million for states and territories to make it easier to open new supermarkets by streamlining planning rules and regulations.
If you live in a remote Indigenous community…
The Government is also reducing the costs of 30 essential products, such as milk, fruit, vegetables and nappies in stores in remote First Nations communities.
If you’re trying to buy your first home…
The government has committed $850million to help first-time home buyers – bringing its total funding to $6.3billion.
The money will largely be used to increase income caps for their help-to-buy scheme, which allows people placing their first step on the property ladder to buy with a deposit as low as two per cent.
The new funding commitment will increase income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents.
Property price caps will also be linked to the average house price in each state and territory, with the government predicting it will make participants eligible for five million more homes across the country.
The Government also has an ambitious target of 1.2 million new, well-located homes over five years under the National Housing Accor
Property price caps will also be increased and linked with the average house price in each state and territory, not dwelling price, so first home buyers have more choice.
Another $49.3million will be offered to the states and territories to increase programs aimed at boosting the construction of prefabricated and modular homes.
The Government also has an ambitious target of 1.2 million new, well-located homes over five years under the National Housing Accord.
They also plan to ban foreign buyers from purchasing existing dwellings for two years from 1 April 2025 to free up housing stock.
If you are a renter…
The Government is implementing A Better Deal for Renters, which attempts to tighten the rules around reasonable grounds for eviction and tries to limit rental increases to once a year.
They will also continue to deliver a 45 per cent increase in maximum rates of Commonwealth Rent Assistance.
Eligible apprentices in housing construction occupations will receive up to $10,000 in financial incentives over the course of their apprenticeships from 1 July 2025
If you are an apprentice tradie…
Eligible apprentices in housing construction occupations will receive up to $10,000 in financial incentives over the course of their apprenticeships from 1 July 2025.
‘To build more, we need to train more builders,’ Dr Chalmers said.
‘That’s why we’re attracting more apprentices into the housing industry.
‘By doubling incentive payments so eligible apprentices get up to $10,000 if they train-up in the housing construction sector.’
If you are a prospective student…
The Government is promising to make permanent 100,000 free TAFE places every year from 2027.
It has already delivered almost 600,000 Free TAFE courses since it started in 2023.
If your home or community was damaged by ex-Tropical Cyclone Alfred…
The Government has set aside $1.2billion in the Contingency Reserve for the impacts of ex-Tropical Cyclone Alfred and future natural disasters.
It includes $15million of support for early recovery and $10,000 Business Continuity Payments to Child Care Subsidy services closed or partially closed during the storm.
It also includes 13 weeks of income support for the worst affected, provided by the Disaster Recovery Allowance, and a one-off payment under the Australian Government Disaster Recovery Payment for those eligible.
If you bank in rural Australia…
The Government has secured commitments from the major banks to continue operating over 800 of their branches in regional and remote Australia until at least 31 July 2027.
It has also ordered the banks to increase its investments in Australia Post’s Bank@Post service, which many people in rural Australia rely on.
If you are an Australia-owned and Australian-made business…
There will be $20million set aside to support Australian producers through the Buy Australian Campaign.
While details remain thin on the ground, it will encourage consumers to buy Australian-made products.
Mr Albanese previously called on Aussies to ‘back Team Australia’ in the wake of US President Donald Trump’s tariff threats.
‘I would urge Australians, if they’re in a local shop, to look to buy Australian – that’s the one way that consumers can assist to create jobs here and support our local industries,’ Mr Albanese said two weeks ago, as he promised more details in the Budget.
If you celebrate Australia Day…
The Government will provide $10 million in 2025–26 for the National Australia Day Council to deliver community grants for Australia Day events.