2025 federal Budget summary
Jim Chalmers’ fourth Budget: a new tax cut, a $42.1 billion deficit and every measure by portfolio
Jim Chalmers handed down his fourth Budget as Treasurer, returning to deficit after back-to-back surpluses: $27.6 billion in 2024–25, almost half what had been forecast before the 2022 election, and $42.1 billion forecast for 2025–26. Growth was expected to pick up from 1½ per cent in 2024–25 to 2½ per cent in 2026–27, and inflation to be 2½ per cent through the year to June 2025.
The headline measure was a new tax cut, taking the first marginal rate from 16 to 14 per cent over two years at a cost of $17.1 billion. Around it sat cost-of-living relief on power bills, medicines and student debt and a large investment in bulk billing, set against a warning that escalating trade tensions could disrupt trade, investment and economic activity.
The full report · 33 pages, with every chart.
Get the full reportWhat we found
1. The first tax rate was cut from 16 to 14 per cent over two years
The rate was to fall to 15 per cent from 1 July 2026 and to 14 per cent from 1 July 2027, reducing tax receipts by $17.1 billion over five years from 2024–25. The Treasurer said the average earner would get an extra $536 a year once the cuts were fully in place, and the Budget also lifted the Medicare levy low-income thresholds at a cost of $648.0 million over five years.
2. Deficits returned after two surpluses: $27.6 billion, then $42.1 billion
The underlying cash balance was a $27.6 billion deficit in 2024–25 and forecast at $42.1 billion in 2025–26, an improvement of $4.8 billion driven by higher tax receipts from strong employment. Deficits of between $35.7 billion and $37.2 billion were forecast for each year to 2028–29, with gross debt rising from $940 billion to $1,223 billion.
3. Cost-of-living relief centred on power bills, medicines and student debt
Every household and one million small businesses were to receive two more $75 electricity rebates up to 31 December 2025, at a cost of $1.8 billion. The maximum PBS co-payment for general patients was to fall from $31.60 to $25.00 ($784.6 million over four years), and outstanding HELP and other student debt was to be cut by 20 per cent, removing $16 billion.
4. Health spending centred on $7.9 billion to lift bulk billing
The summary listed $7.9 billion in incentives to boost bulk billing, and the Treasurer described a record $8.5 billion to lift bulk billing rates and build the health workforce, which he said should see 9 out of 10 GP visits fully bulk billed by the end of the decade. Public hospitals received an extra $1.8 billion in 2025–26, and 50 more Medicare Urgent Care Clinics were funded at $644 million.
What’s in the report
- Key takeaways p. 1
- Policy measures p. 2
- Fiscal overview p. 9
- Treasurer’s speech p. 12
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