Federal Budget 2025–2026: Key Takeaways for Australian Businesses

Typically delivered in May each year, the 2025–2026 Federal Budget was brought forward and handed down on 25 March 2025 by Treasurer Jim Chalmers. This budget marks the first return to deficit since 2022, reflecting increased spending commitments across key social and economic areas.

Importantly, it’s worth noting that the proposed measures will only take effect if the Labor Government is re-elected in the upcoming Federal Election on 3 May 2025.

Here are the major highlights from the budget that could impact your business and workforce:

Tax Cuts – But Not Just Yet

While the budget includes income tax relief for all Australians, these cuts will be phased in from 1 July 2026. For now, there’s no immediate change to income tax settings.

Non-Compete Clauses to Be Banned for Most Workers

In a move to promote job mobility and fairer employment terms, non-compete clauses will be made illegal for workers earning below the high-income threshold (currently $167,500 p.a.). This could significantly affect how businesses structure employment contracts and retain talent.

Pay Rise for Care Workers

Care sector employees—nurses, childcare workers, and aged care staff—are set to receive pay increases as part of the government’s commitment to valuing essential work and closing gender-based pay gaps.

Education and Skills Boost

• 100,000 free TAFE places will be made available every year to support workforce development in priority sectors.
• HECS-HELP debts will be reduced by 20%, easing the financial burden on tertiary students and graduates.

Support for Local Producers

A renewed “Buy Australian” campaign will receive millions in government funding, aimed at boosting demand for locally produced goods and strengthening domestic industries.

Energy Bill Relief Extended

The existing energy rebate scheme has been extended through to December 2025, offering households and small businesses a further $150 discount on power bills.

Instant Asset Write-Off to End

The popular instant asset write-off, which allows businesses to immediately deduct the full cost of eligible assets, will not be extended beyond 30 June 2025. This may prompt businesses to bring forward planned asset purchases before the deadline.

Final Thoughts

This budget delivers targeted relief and investment in workforce development and cost-of-living measures. However, the implementation of these initiatives hinges on the outcome of the May 2025 federal election.

We’ll continue to monitor developments and provide updates on how any confirmed changes may affect your business strategy, staffing, and compliance obligations.

If you’d like to discuss how to prepare for the end of the instant asset write-off or changes to employment contracts, please reach out to us.