On Tuesday 14 May 2024, Treasurer Jim Chalmers released the 2024-25 Federal Budget, aiming to assist Australian households and ease the cost of living pressures with tax cuts, energy bill rebates, cheaper medicines and increases to medicare thresholds.

We have outlined the key measures announced below. Do keep in mind these are proposed measures and are not yet passed.

2024-25 Federal Budget Takeaways

  1. Cost of living relief – energy bill rebates

    – All Australian households will receive a non-means tested $300 rebate for their energy bills from July 1st, 2024.  Small business owners will additionally receive a $325 rebate for their business energy bills. ​

  2. Stage 3 tax cuts

    Stage 3 tax cuts will be implemented from 1 July 2024. The new rates will see tax savings for all tax-payers regardless of their income bracket.

    – the 19% tax rate will be reduced to 16%
    – the 32.5% tax rate will be reduced to 30%,
    – increase the 37% tax rate threshold from $120,000 to $135,000
    – increase the 45% tax rate threshold from $180,000 to $190,000

    Middle-income earners will receive a substantial tax saving with those with a taxable income of $100,000 saving $2,179 per year.

    The below table demonstrates the current tax rates and the new rates from 2024/5 (does not include Medicare levy).

    Source: Colonial First State

    This table demonstrates the tax savings per income bracket from 2023/4 to 2024/5 and beyond (does not include Medicare levy).

    Source: Colonial First State

  3. Increasing the Medicare levy low-income thresholds

    – The income limits when the Medicare Levy applies for singles, families and seniors will be increased to ensure low-income individuals and families are exempt from paying the Medicare levy or pay a reduced levy rate.

    The below table demonstrates current thresholds and the increased threshold from 2023/4 to 2024/5 and future years.

    Source: Colonial First State

  4. Social security payments

    – Deeming rates will be frozen at current levels for a further 12 months until 30 June 2025 to help pensioners keep money in their pockets throughout the cost of living crisis.

    – The maximum rates of Commonwealth Rent Assistance will be increased by 10% from 20 September 2024. ​

    – The higher rate of JobSeeker will be extended to single recipients able to work up to 14 hours per week from 20 September 2024. ​

    – Carer Payment recipients will have increased flexibility to undertake work, study, and volunteering activities from 20 March 2025. ​

    – The indexation of student debt will be capped at the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI) from 1 June 2023. ​

    – The maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment will be frozen for up to five years from 1 July 2024. ​

  5. Aged care support

    – The new Aged Care Act will be deferred to 1 July 2025 with funding provided over five years to deliver key aged care reforms and implement recommendations from the Royal Commission into Aged Care Quality and Safety.

  6. Cheaper medicines

    – The maximum Pharmaceutical Benefits Scheme (PBS) co-payment will be frozen for five years for concession cardholders and one year for Medicare cardholders as opposed to increasing each year on January 1.

  7. For businesses

    – Along with the energy bill rebate, the $20,000 small business instant asset write-off will be extended by another 12 months until 30 June 2025 for those with an aggregated turnover of less than $10 million.

To discuss how the 2024-25 Federal Budget may affect you in the coming year, get in touch with the team and make an appointment.