2025 Federal Budget: Key Impacts for Individuals and Businesses

The 2025 Australian Federal Budget brings a host of new measures according to the Government that aim to support both individuals and businesses in navigating the economic landscape. While many of these changes are intended to boost economic growth and provide relief, there are several key points that will have a direct impact on tax liabilities, healthcare contributions, education loans and employment contracts.

1. Tax Cuts for Individuals

These cuts are designed to help every Australian taxpayer with cost-of-living relief and return bracket creep by increasing the disposable income available to them. While the specifics will vary depending on individual circumstances, here's a summary of the key tax changes:

Income Range	Current Rate (from 1 July 2024)	New Rate (from 1 July 2026)	New Rate (from 1 July 2027)
Up to $18,200	0%	0%	0%
$18,201 – $45,000	16%	15%	14%
$45,001 – $135,000	30%	30%	30%
$135,001 – $190,000	37%	37%	37%
Over $190,000	45%	45%	45%

The above rates do not include the Medicare levy of 2%.

These tax cuts are part of the Government's broader plan to enhance incentives to work, boost labour supply and support the private sector recovery.

2. Medicare Levy Low Income Threshold Increase

The threshold for the Medicare Levy exemption has been increased, meaning more individuals and families will be exempt from this levy.

Category	Current Threshold (from 1 July 2023)	New Threshold (from 1 July 2024)
Singles	$26,000	$27,222
Seniors and Pensioners	$41,089	$43,020
Families	$43,846	$45,907
Additional for each dependent child	$4,027	$4,216

This increase offers relief from the Medicare Levy for low-income earners.

3. HELP Loan Repayment Changes

The HELP program sees an increase in the income threshold, income assessed for repayment and a one-off reduction in loans as summarised below:

• The minimum repayment threshold will change from $54,435 (from 1 July 2024) to $67,000 (from 1 July 2025)

• HELP repayments will only be calculated on the income above the new $67,000 threshold instead of the total annual income.

• A reduction to the balance of all study and training support loans by 20%, to take effect before 1 June 2025

  
  

4. Non-Compete Clauses: Impact on Businesses

For business owners, one notable change in the 2025 Budget is a review and modification of non-compete clauses in employment contracts. While non-compete clauses are meant to protect businesses from unfair competition the budget introduces new measures that may impact the enforceability of such clauses.

What’s Changing?

The Australian Government has proposed stricter guidelines surrounding the enforceability of non-compete clauses, particularly in sectors where there is a high turnover of employees or where competition is vital for economic growth. Employers will now have to demonstrate a clear and legitimate business interest for enforcing such clauses, and these clauses will be subject to closer scrutiny to ensure they are not unduly restrictive.

Implications for Businesses:

• Smaller businesses may find it harder to enforce non-compete clauses, especially if they are seen as overly broad or restrictive.

• Larger corporations may face challenges if they try to prevent employees from joining competitors, especially if the employee is not in a senior role with access to critical proprietary information.

This change is designed to create a more competitive and dynamic business environment, but it also requires companies to reassess their employment contracts.