It was billed as a cost-of-living budget to fight a cost-of-living election.
From tax cuts to energy bill relief and cheaper medicines, here’s what Jim Chalmers’ fourth federal budget means for households.
Tax cuts
A little over 12 months after its bombshell decision to redesign the Coalition’s stage-three tax cuts, the Albanese government has sprung another surprise in the lead-up to the election.
Under the new tweaks, the tax rate for the $18,201 to $45,000 income threshold will be cut from 16% to 15% after 1 July 2026 – and lowered further to 14% from 1 July 2027.
It means a tax cut of up to $268 a year from mid-2026 and up to $536 from 1 July 2027.
When combined with the 2024 tax cuts, a worker on the average wage of $79,000 will be paying $2,190 less in 2027-28 compared with 2023-24.
The tax cuts will cost the budget $17.1bn over five years from 2024-25, making it the biggest component of Labor’s pre-election cost-of-living package.
“These additional tax cuts are modest but will make a difference,” said the treasurer, Jim Chalmers.
Labor is delaying the changes for 12 months to avoid stoking inflation, which is now expected to have cooled to 2.5% by the middle of the year.
Increase to the Medicare levy threshold
The government will increase the Medicare levy income threshold by 4.7% to provide hip-pocket relief for singles, families, seniors and pensioners.
The Medicare levy will now kick in for singles earning $27,222, up from $26,000.
The family threshold will rise from $43,846 to $45,907 and from $41,089 to $43,020 for single seniors and pensioners.
The family threshold for seniors and pensions will rise from $57,198 to $59,886.
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The measure will cost the budget $648m over five years from 2024-25.
Bill relief
As announced at the weekend, all households and about 1m small businesses will receive an extra $150 in power bill rebates to cushion them against looming energy price increases.
The rebates will be applied to bills in the second half of 2025, after the $300 credits included in last year’s federal budget expire on 30 June.
The concessions, which will cost $1.8bn over the forward estimates, are designed to help buffer households against expected energy price rises of almost 9% in some states next financial year.
Cheaper medicines and more bulk billing
In another pre-budget announcement, Labor committed to slash the maximum price of a script for medicines listed on the pharmaceutical benefits scheme from $31.60 to $25 from 1 January 2026.
The measure will cost the budget $784m over four years from 2025-26.
The federal budget also makes provisions for Labor’s $8.5bn boost to Medicare, which includes tripling the bulk-billing incentive for all patients, with the goal of making nine out of 10 GP visits free by 2030.
“We are proud to make the single largest commitment to Medicare since its creation,” Chalmers said.
Childcare and student debt
Provisions for Labor’s $426m commitment to three days of subsidised childcare for most families and their pledge to cut student debts by 20% were part of December’s midyear budget update, meaning the funding profiles were not included in Tuesday’s papers.
The policies still got a mention in Chalmers’ budget speech and will form a key part of Labor’s re-election pitch to voters.