On 3 May 2025, Australians decisively re-elected the Albanese Labor Government.
1. Instant Deductions
From the 2026–27 financial year, the government will introduce a new $1,000 instant tax deduction designed to make tax time quicker, easier, and less costly for millions of Australians. Under this reform, taxpayers can choose to take a $1,000 deduction without needing to keep receipts or track individual work-related expenses under that threshold. More than 5.7 million taxpayers who currently claim under $1,000 in deductions are expected to benefit. This approach will eliminate paperwork for many and significantly reduce the need for professional tax services, providing average annual tax relief of $205 and up to $320 for some.
Australians earning between $45,001 and $135,000 will be among the main beneficiaries, with 88% of those eligible falling under the $135,000 income mark. The government expects the time-saving benefit alone to be worth around $200 million annually across the economy. Those who claim more than $1,000 in deductions can still do so and non-work-related deductions, such as charitable donations, can continue to be claimed on top. When combined with Labor’s previously legislated tax cuts, the average full-time worker earning $103,000 could receive a combined benefit of up to $3,110.
2. Student Debt Relief
In a major boost to students and graduates, the Albanese Government will cut 20% from all outstanding student loans as of 1 June 2026. This includes all HELP, VET Student Loans, Australian Apprenticeship Support Loans, and other income-contingent educational debts. In total, this measure will wipe around $16 billion in student debt for over three million Australians.
For an individual with the average HELP debt of $27,600, this equates to a $5,520 reduction. Whether a person owes $10,000 or $60,000, every loan holder will benefit proportionally, with relief ranging from $2,000 to over $12,000. This measure builds on earlier changes to the indexation formula that already removed $3 billion in student debt. In addition to reducing debt, the government will also lower the annual repayment rate and raise the income threshold before repayments begin, providing much-needed breathing room for Australians entering the workforce. These initiatives are part of a broader reform of the tertiary education system.
3. Instant Asset Write-Off Extension
Despite not announcing it as a measure in the 2025-26 Federal Budget, Labor has announced it will extend the $20,000 Instant Asset Write-Off for another 12 months through to 30 June 2026. This initiative allows eligible businesses to immediately deduct the full cost of new or second-hand assets costing less than $20,000 each.
4. Measures Announced in 2025-26 Federal Budget
The biggest Budget announcement was the new income tax cuts for individuals which will result in the $18,201 to $45,000 tax band decreasing from 16% to 14% over two years. Starting in July 2026, the 16% tax rate will be reduced to 15%, followed by another decrease to 14% in the following year. This is expected to cost the budget $17 billion and deliver estimated tax savings of $268 over the 2026-27 tax year and $536 over the 2027-28 tax year for all taxpayers earning $45,000 per annum or more.
In line with its economic agenda, the Albanese Government’s 2025-26 Budget includes several other major commitments. From 1 April 2025, foreign buyers were banned from purchasing established homes for two years, with exceptions assessed case-by-case. To ensure this policy is enforced, the ATO and Treasury will receive funding to conduct audits and crack down on land banking.
The government is also extending energy bill rebates through to the end of 2025, providing two additional $75 instalments to households and small businesses. Support for the alcohol industry continues with increased excise relief and a pause on the indexation of draught beer excise rates starting in August 2025.
In an effort to improve tax integrity, the ATO will receive nearly $1 billion over four years to expand compliance efforts. Meanwhile, the Tax Practitioners Board will be strengthened, with new powers to penalise high-risk advisors and improved support for practitioners returning after career breaks.
For a more comprehensive breakdown of the announcements made by the Labor Government in the Federal Budget, click here.