Tax Measures Proposed by the Re-Elected Australian Labor Party

The Australian Labor Party has been re-elected to form government with a majority following the 2025 Federal Election.

During the election campaign, the Australian Labor Party proposed a number of tax-related measures. Some of these measures have been legislated, while others remain proposals at this stage.

Below is a summary of the key announcements and how they may apply to individuals and small businesses, subject to future legislative changes.

Tax cuts

The marginal tax rate for the personal income tax threshold bracket from $18,201 to $45,000 will be reduced from 16% to 15% from 1 July 2026, and further reduced to 14% from 1 July 2027. These tax cuts, now legislated, will save about $10 a week for the average earner once both cuts have flowed through.

Instant tax deduction

A $1,000 instant tax deduction for work-related expenses from 2026–27 income year has been proposed by the ALP, this measure will allow taxpayers who earn labour income to choose to claim the $1,000 instant tax deduction instead of claiming individual work-related expenses. Those who choose to do so will not need to collect receipts for deductions less than $1,000.

Extend $20,000 instant asset write-off

As announced in the 2025 Federal budget, the increased instant asset write off is also proposed to be extended.

This measure will allow small businesses that choose to deduct depreciating assets under the simplified depreciation rules (Subdiv 328-D of ITAA 1997) to continue to deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2026. The threshold applies per asset, which means small businesses can claim multiple purchases.

Reduced student loan debts and repayments

As announced in the 2025 Federal budget, from 1 July 2025, the government will implement a 20% reduction on all student loan debts, including HELP, VET Student Loans, and Australian Apprenticeship Support Loans.

The ALP formed government also plans to increase the minimum repayment threshold from $51,500 to $67,000 in from the 2025-26 income year.

Increased Medicare-levy thresholds

Also announced in the 2025 Federal budget, the Medicare levy low-income thresholds for singles, families, and seniors and pensioners will be increased from 1 July 2024.

Other measures

Energy Bill Rebates: The government has proposed to continue energy bill rebates from 1 July 2025. Households would receive $150 in total rebates, delivered as $75 per quarter until 31 December 2025.

Home Guarantee Scheme: The government also proposes to expand the Home Guarantee Scheme to include all first home buyers. The proposed change would that the existing Home Guarantee Scheme will be extended to include all first home buyers, allowing them to purchase a property with a minimum deposit of 5%, the current eligibility criteria will be scrapped.

Contact Us

If you would like to understand how any of these proposed measures may apply to your individual or business circumstances, please contact our office.

We are available to assist with any questions or planning considerations.