Australia's tax rate is set to decrease from 16% to 15% by July 1, 2026, providing AUD 3 billion in tax cuts for the fiscal year 2026/27, as detailed in the federal budget unveiled on March 25, 2025. By July 1, 2027, the rate will decrease further to 14%, culminating in total income tax reductions amounting to AUD 6.7 billion, which will benefit all taxpayers.
The budget also provisions for extending energy bill relief, enhancing support for first-time homebuyers, increasing investments in women's health, and freezing the excise on draught beer for two years. Additionally, it advances AUD 1 billion in defense spending to counter China's rising assertiveness and in response to U.S. calls for allies to bolster their military budgets. The projected deficit stands at AUD 42.1 billion, or 1.5% of GDP, for fiscal 2026, exceeding the AUD 40 billion forecast. The shortfall for 2025 is anticipated to be AUD 27.6 billion following two consecutive years of surpluses. With an election announcement potentially imminent, Prime Minister Anthony Albanese is aiming to regain voter support amidst challenges such as inflation, high interest rates, and a housing shortage.
