Budget 2025 recap: What’s in it to help with your cost of living

The key announcements in the federal budget for 2025-26 include significant investment into healthcare, cost of living relief and a last-minute surprise of $17.1 billion in tax cuts.

On Tuesday night (25 March), Treasurer Jim Chalmers outlined plans for an extra 18 million bulk billed GP visits every year, cheaper medicines on the Pharmaceutical Benefits Scheme (PBS) and an electricity bill rebate of $150 available until the end of the year.

With cost of living top of mind, we’ve got a recap on what’s in the budget that could help you save money.

Federal budget 2025: Key points

• A tax cut for all Australian taxpayers

• An extra 18 million bulk billed GP visits every year

• A $150 energy bill discount for every household

• Medicines under the PBS capped at $25

• Income caps increased for the Help to Buy scheme

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A tax cut for all taxpayers

• The lowest tax bracket is getting a 1% cut from July 2026
• The average tax cut is expected to be around $43 a week

In a surprise announcement, the federal budget includes a tax cut for all Australian taxpayers – effective from 1 July, 2026.

The lowest tax bracket will be cut by 1% under the plan, which means the tax rate for earnings between $18,201 and $45,000 will be lowered from 16% down to 15%.

These changes were widely unexpected, but they follow on from the stage three tax cuts that were announced in the 2024–25 federal budget, which saw those earning between $45,001 – $135,000 get a 2.5% tax cut.

Here’s what tax rates will look like from July next year:

• Tax free up to $18,200
• 15% tax rate for earnings between $18,201 and $45,000
• 30% tax rate for earnings between $45,001 and $135,000
• 37% tax rate for earnings between $135,001 and $190,000
• 45% tax rate for earnings between $190,000 and above

Boost to bulk billing and Medicare

• $8.5 billion investment in Medicare
• Investment to add 18 million bulk billed GP visits each year

This year’s budget features an $8.5 billion investment into Medicare, part of which aims to fund an extra 18 million bulk billed visits to the GP every year.

An additional 18 million bulk billed visits could mean 9 out of 10 visits to the doctor will be completely covered by Medicare by 2030, according to the government.

Under the plan, the government wants to expand its bulk billing incentive to cover all Australians. It’s currently focused on pensioners, concession card holders and children.

On top of the bulk billing boost, the government wants to also fund 400 nursing scholarships and train 2,000 new GPs by 2028.

Another energy bill rebate

• $150 power bill rebate for every Australian household
• About 1 million small businesses will also receive rebate

The government is extending its energy bill relief, with a $150 discount to be automatically applied to power bills until the end of 2025.

Just like the last financial year’s bill relief, households and eligible small businesses will get the discount in quarterly instalments, which shakes out to be $37.50 off each quarter.

These $150 rebates follow the $300 electricity bill relief that was announced in the 2024–25 federal budget last year, which were due to end on 30 June.

Since this $150 discount is slated for the last six months of the year, and the $300 rebate was rolled out over 12 months, it’s the same value we’ve already been receiving.

Plan to make medicines even cheaper

• Scripts on the PBS capped at $25
• Four out of five PBS medications to get cheaper

The cost of medicines on the PBS are set to be reduced further and capped at $25, in another move to address cost of living pressure.

In last year’s federal budget, the cost of medication under the PBS was capped at $31.60 for the 2024–25 financial year, but the latest budget will make it even cheaper.

The government says four out of five medicines on the PBS will get a price cut under the plan, a move which will cost the budget $689 million.

Last year’s deal for concession card holders and pensioners still stands, with their PBS medications frozen at $7.70 until 2030.

Help to Buy scheme expanded 

• Plans to increase the income cap for individuals and joint applicants
• Property price caps also increased

The housing crisis is likely to be a top issue for voters at the upcoming election, and one way the government is attempting to address this is by expanding its Help to Buy scheme.

Help to Buy is a shared equity program aimed at getting first home buyers into property sooner.

It does this by allowing for a smaller deposit of at least 2% for your home loan, while the government contributes its own equity of up to 40% of the purchase price for a new home, or up to 30% of the price for an existing home.

The Help to Buy scheme hasn’t officially launched yet, but according to the budget papers, the government wants to widen the net by increasing its income and property price caps.

The changes would see the income cap increased from $90,000 to $100,000 for individuals, while joint applicants and single parents would see the income cap go from $120,000 up to $160,000.

Childcare subsidies

• Three days of subsidised childcare for more families
• Requirement to work, study or look for work scrapped

Australian parents can benefit from three days of subsidised childcare, as long as their combined income is less than $533,280.

Parents previously needed to pass an activity test to be eligible for the childcare subsidy, but that has been scrapped to allow more families to benefit.

According to the government, families with a combined income of $50,000 to $100,000 are expected to save $1,460 each year on average.

If the government is re-elected, the updated childcare subsidy is expected to take effect from January 2026.

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So what’s next? If you’re keen to improve your own balance sheet at home, be sure to check out our guide on how to create a budget and consider some of the best savings accounts.