Tax measures proposed by the re-elected ALP

TNFG
May 13
3 min read

Tax measures proposed by ALP — Tax measures proposed by the re-elected ALP.

The ALP has been re-elected to form a government with majority, after winning the 2025 Federal election.

During the election campaign several tax changes were proposed by the ALP, that may come into come into effect in their next term.

We have briefly analysed these measures below for you, explaining how they may apply to you or your business (post enactment).

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

As promised in their election campaign, the Labor Government may introduce a $1,000 instant tax deduction for work-related expenses from 2026–27 income year, after getting re-elected for a second term.

Simplifying claiming work-related deductions

The proposed measure will allow taxpayers to choose to claim a $1,000 instant tax deduction instead of claiming individual work-related expenses, saving time and money.

Taxpayers who choose to claim this instant deduction will not be required to to collect receipts for deductions less than $1,000 and helping save compliance time and resources.

Eligibility

To be eligible for the instant tax deduction:

a taxpayer must earn labour income for example salaries and wages
a taxpayer must not exclusively earn business or investment income.

Taxpayers who only earn business or investment income may continue to claim their tax deductions in the usual way.

The instant tax deduction will not be available if taxpayers claim more than $1,000 in work-related deductions.

Other deductions

Charitable donations and other non-work related deductions would continue to be claimed on top of this instant tax deduction.

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

The power bill rebate extension will also come into effect from 1 July 2025, $150 in energy bill rebates will again be automatically applied until 31 December 2025 i.e. $75 per quarter.The existing Home Guarantee Scheme will also 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

Please don’t hesitate to contact our office and we will be pleased to guide you through any queries that you may have in relation to these proposed measures.