The 2025–26 Federal Budget delivers a mix of tax cuts, cost-of-living relief, industry investment, and support for critical sectors. From reducing income tax rates to extending energy bill relief, the government aims to ease financial pressures while driving long-term economic growth.

This year’s budget also places a strong focus on sustainability and industry development, with billions allocated to renewable energy, hydrogen production, and manufacturing. At the same time, key social initiatives such as increased funding for apprenticeships, early education, and First Nations businesses seek to create more opportunities for Australians across different sectors.

Here's a breakdown of the most significant measures and what they could mean for individuals, businesses, and communities.

Tax cuts

The Government will deliver more tax cuts to all Australian taxpayers, with additional tax 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.

• From 1 July 2027, this tax rate will be reduced further to 14 per cent.

Energy bill relief

The Government is extending energy bill relief to the end of 2025 for every household and around one million small businesses. 

• The Government will provide around $1.8 billion in additional payments on top of the nearly $5 billion of bill relief being delivered so far. 

• Every household and around one million small businesses will receive two $75 rebates directly off their electricity bills through to 31 December 2025.

• Through to 31 December 2025, households will receive a $150 energy rebate off their electricity bill in two quarterly payments. This is in addition to the $300 going to households in energy bill relief in 2024–25; and is on top of other state rebates.

• The Energy Efficiency Grants for Small and Medium Sized Enterprises program is providing $56.7 million in grants of up to $25,000 to over 2,400 businesses, funding a range of energy upgrades, such as replacing inefficient appliances and improving heating systems.

Building a Future Made in Australia

This Budget builds on the Government’s existing $22.7 billion Future Made in Australia agenda.

• The Government is unlocking $8 billion of additional investment in renewable energy and low emissions technologies through a $2 billion expansion of the Clean Energy Finance Corporation. This is in addition to $36.9 million to enhance the use of existing grid infrastructure and a $10 million Accelerated Connections Fund to reduce grid bottlenecks.

• The Government has legislated $13.7 billion in hydrogen and critical minerals production tax incentives and has allocated $1.5 billion in support for priority areas through the Future Made in Australia Innovation Fund, including:

  1. $750 million for green metals

  2. $500 million for clean energy technology manufacturing capabilities

  3. $250 million for low carbon liquid fuels.

• The $2 billion Green Aluminium Production Credit will support Australian aluminium smelters to transition to renewable energy, and the $1 billion Green Iron Investment Fund will accelerate the development of this new industry.

Expanding access to high‑quality early education

The Government is investing $5 billion towards building a universal early childhood education and care system. Investments include:

• $3.6 billion to lift the wages of early educators through the Worker Retention Payment, benefitting up to 200,000 early childhood educators and teachers.

• $1 billion to establish the Building Early Education Fund to increase the supply of high‑quality early childhood education and care places across Australia, especially in priority and under‑served markets.

• $426.6 million for the new 3 Day Guarantee, which replaces the Child Care Subsidy Activity Test to ensure families are eligible for at least 3 days a week of subsidised early childhood education and care.

Supporting First Nations businesses and building wealth

The Government is investing $23.9 million over five years from 2024–25 to strengthen the Indigenous Procurement Policy, and $3.4 million over three years from 2025–26 to establish a place‑based business coaching and mentoring program for First Nations businesswomen and entrepreneurs.

The Government is also boosting Indigenous Business Australia’s Home Loan Capital Fund by $70.9 million over two years from 2025–26 to increase opportunities for First Nations Australians to buy their own home and build intergenerational wealth.

Investing to increase local opportunities

The Government is investing in social enterprises, including contributing $1.2 million to jointly launch the Social Enterprise Loan Fund that will create secure jobs underpinned by wraparound support for vulnerable cohorts. This builds on the first projects committed under the $100 million Commonwealth Outcomes Fund.

Increased support for apprentices

The Government will provide $722.8 million over four years from 2025–26 to deliver increased support for apprentices. Funding includes: 

• $626.9 million over four years from 2025–26 to reframe the New Energy Apprenticeships Program as the Key Apprenticeship Program and expand it to capture critical residential construction occupations.

• $77.8 million over four years from 2025–26 to extend the current interim Australian Apprenticeship Incentive System program settings for a further six months from 1 July 2025 to 31 December 2025. 

• $11 million over four years from 2025–26 to increase the Disability Australian Apprentice Wage Support subsidy. 

• $7 million over four years from 2025–26 to increase the Living Away From Home Allowance.

Boosting Australia’s economic ties with India

The Government will provide $20 million over four years from 2025–26 to support increased economic engagement with India. Funding includes: 

• $16 million to establish an Australia‑India Trade and Investment Accelerator Fund to support cooperative projects targeted at reducing technical and regulatory barriers to trade.

• $4 million to extend the Maitri Grants Program to support exchange and collaboration between Australian and Indian cultural, education, research and business communities.

Disaster support

The Government will provide $28.8 million over two years from 2024–25 to improve Australia’s resilience to natural hazards and preparedness to respond to disasters. 

Funding includes: 

• $17.7 million in 2025–26 for the Bushfire Community Recovery and Resilience Program to support bushfire resilience activities in rural and regional Australia.

• $5.4 million in 2025–26 to support the National Emergency Management Agency’s continued engagement with the states and territories on a national high‑speed and high‑capacity mobile broadband emergency response capability.

• $3.2 million in 2025–26 to extend targeted mental health support for emergency service workers provided through Fortem Australia and the Black Dog Institute.

• $2.5 million over two years from 2024–25 for a one‑off Business Continuity Payment of $10,000 to Child Care Subsidy (CCS) approved services closed or partially closed for eight days or more due to impacts of Ex‑Tropical Cyclone Alfred, subject to conditions, including providers agreeing to temporarily not charge families CCS gap fees during the closure period.

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The 2025–26 Federal Budget delivers a mix of tax cuts, cost-of-living relief, and investment in key industries. While there are positive measures, the budget also leaves gaps that may create challenges for councils, businesses, and individuals alike.

• For Councils: Funding for disaster resilience, social enterprises, and economic development is welcome, but the reliance on competitive grants rather than direct funding means councils will need to fight for resources. Long-term financial sustainability remains a concern.

• For Businesses: Energy rebates, tax incentives for clean energy industries, and funding for apprenticeships offer opportunities, but many small businesses may find limited direct support outside of specific programs.

• For Individuals: Tax cuts and energy bill relief will provide some financial relief, but rising costs in housing, services, and daily expenses may still put pressure on households.

Overall, while the budget provides targeted support, it does not fully address the need for stable, long-term funding, especially for local governments managing growing community needs.

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