2025-26 Federal Budget: What You Need To Know

Labor Treasurer, Jim Chalmers has unveiled the 2025-26 Federal Budget ahead of the upcoming federal election being held on the 3rd of May 2025. This budget introduces a range of measures aimed at addressing cost-of-living pressures and improving healthcare. Key initiatives focus on making medicines more affordable, strengthening community pharmacy, expanding healthcare access, and delivering additional relief for individuals and businesses.

Community Pharmacy and Healthcare

Minister for Health, Mark Butler, said this budget ‘makes the largest investment in Medicare since its creation 41 years ago’, delivering cheaper medicines, more bulk billing, more doctors, more Medicare Urgent Care Clinics, more choice, lower costs, and better health care for women.

Many of the following measures extend from the last budget and build on the 8CPA:

  • $784.6 million over 4 years, from 1 January 2026, the maximum cost of a prescription for a Pharmaceutical Benefits Scheme (PBS) medicine will be cut from $31.60 to $25.

  • $539.4 million to establish the First Pharmaceutical Wholesaler Agreement to maintain medicine accessibility across Australia.

  • $109.10 million to for two national pharmacy trials making it cheaper and easier for women to access contraceptives and treatment for uncomplicated urinary tract infections.

  • $13.2 million for the National Return of Unwanted Medicines Program to continue providing a service that safely disposes of expired and unwanted medicine, helping patient and environmental safety.

  • $5.7 million to improve e-prescribing infrastructure and services.

  • $1 million to support implementation of the Strategic Agreement on Pharmacists Professional Practice with the PSA, updating pharmacist practice standards and guidelines.

  • $1.8 billion over 5 years for new and amended PBS listings, including oral contraceptives and treatments for endometriosis, lymphoma, and menopause hormone therapy.

Additional healthcare investments:

  • $228.70 million in 2025-26 to modernise My Health Record and $15.6 million for initiatives to advance digital healthcare.

  • $657.9 million from 2025-26 to establish 50 additional Urgent Care Clinics, increasing from 87 to 137 clinics.

  • $20.9 million to expand women’s healthcare services, adding 11 endometriosis and pelvic pain clinics (from 22 to 33 clinics). The PBS will also include additional medicines to lower costs for those undergoing treatment for endometriosis and fertility treatment.

  • $1.5 million to extend funding for smoking and vaping cessation programs.

  • $7.9 billion over 4 years (and $2.4 billion each year ongoing) to expand the availability of bulk billing incentives, which includes additional incentive programs for GP’s who commit to bulk bill from 1 November 2025. This will allow nine out of 10 GP visits by patients to be bulk billed by 2030.

 

Small Business

While the previously announced $20,000 instant asset write-off for small businesses (due to expire June 30, 2025) remains unlegislated, there was no further mention in this budget. The accounting and tax community continues to push for this measure to be made permanent, and even increase the threshold, to allow small business to better plan and invest in their future.

The Government announced it will extend the Energy Bill Relief Fund introduced last budget, providing eligible small businesses (and households) $150 energy bill rebates from July to December 2025. These rebates will be automatically applied to electricity bills.

 

Individuals

Tax cuts:

In addition to previously legislated tax cuts that commenced on July 1, 2024, the Government has introduced further tax relief measures:

·         From 1 July 2026, the 16% tax rate will be reduced to 15%.

·         From 1 July 2027, the 15% tax rate will drop to 14%.

These changes will provide taxpayers with an additional $268 tax cut in 2027 and $536 in 2028.

Combined with prior tax cuts, the total estimated tax relief will be:

·         $43 per week ($2,236 annually) in 2026-27.

·         $50 per week ($2,600 annually) in 2027-28.

An updated tax table is shown below:

Increasing Medicare levy thresholds:

Another newly announced tax measure is the increase of the Medicare levy. Backdated to 1 July 2024, this provides further tax relief so that low-income individuals continue to be exempt from paying the 2% Medicare levy or pay a reduced rate.

HELP Debt changes:

The Government announced changes to the Higher Education Loan Program (HELP), cutting a combined $19 billion in student debt. This measure will significantly impact pharmacy students and graduates. Key changes include:

  • A 20% reduction in all existing student debt, effective 1 June 2025.

  • An increase in the HELP loan repayment threshold from $54,435 to $67,000 for the 2025-26 financial year.

For example, a graduate earning $80,000 with a $35,000 student debt will have their debt reduced to $28,000 before indexation. With these proposed changes, their compulsory repayment for 2025-26 will decrease to $1,950, saving them $850.

HELP debts impact young people’s borrowing capacity, as lenders often take these amounts into consideration when assessing financial applications. Reducing student debt and reducing compulsory HELP repayments effectively provides another form of tax relief for those with student debt and helps them secure their financial futures.

 

Final Thoughts

While there was no significant tax reform or small business support, the announced tax cuts are still a welcome relief. Many of the budget measures strengthen the role of pharmacists and support pharmacy business growth. Steps are being taken in the right direction to enhance medicine accessibility, affordability, and patient care—because what benefits patients ultimately benefits pharmacies.

References

Priya Narsing

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