The 2025–26 Federal Budget: what a small business can actually plan around

The Treasurer handed down the 2025–26 Federal Budget on Tuesday night. For a small business, three things in it matter, and only one of them takes effect in the year you are currently trading through.

The personal income tax cuts are real, but they start on 1 July 2026 — two income years away. Energy bill rebates continue to 31 December 2025 and arrive automatically. And the Australian Taxation Office was given $999.0 million to expand its compliance work, which is the measure most likely to reach you.

The instant asset write-off was not mentioned. Not extended, not reduced, not referred to at all.

The revenue side of this Budget is thin

Budget Paper No. 2 sets out every revenue measure in the Budget. This year the whole receipts section runs to eight pages, and the instant asset write-off is not among them. Neither is company tax, Division 7A, the small business CGT concessions, or the trust distribution rules.

For a Budget delivered in an economy full of businesses waiting on tax certainty, that is a remarkably short list. The only measure that changes the tax position of a trading business is the alcohol one, and it applies to brewers, distillers, wine producers and the venues that sell draught beer.

So the first thing to say plainly is this: if you were waiting on the Budget before making a decision about your business structure or your equipment, it did not give you an answer.

The tax cuts do not touch the 2025–26 year

Two rate cuts were announced, both on the same bracket. According to the Government's new tax cuts factsheet, the 16 per cent rate that applies to taxable income between $18,201 and $45,000 falls to 15 per cent from 1 July 2026, then to 14 per cent from 1 July 2027.

The benefit is capped by the size of that bracket. Compared with 2024–25 settings, the factsheet puts the extra tax cut at up to $268 a year from 1 July 2026 and up to $536 a year from 1 July 2027. Every taxpayer above $45,000 gets the same $268 and then the same $536, because the cut is on a band of income everyone passes through. Budget Paper No. 2 costs the measure at $17.1 billion over five years.

Around 1.5 million sole traders are expected to benefit, which is the only way these cuts touch a business directly. If you trade through a company, nothing here changes your company rate.

Three points a business owner should hold on to.

• Nothing changes in 2025–26. The rates that apply from 1 July 2025 are the ones already in place. Your PAYG withholding tables and your instalment rate will not move because of this announcement.
• The first cut lands in the 2026–27 income year, which for most businesses means the return you lodge in 2027.
• It was not law when the Budget was delivered. The enabling bill was before Parliament in its last scheduled sitting week and had not received Royal Assent.

The Budget also increases the Medicare levy low-income thresholds, and that one runs backwards rather than forwards. It applies from 1 July 2024 — inside the income year now finishing. The singles threshold rises from $26,000 to $27,222, and the family threshold from $43,846 to $45,907. If you have staff or family members near those figures, their 2024–25 return is the one affected.

The instant asset write-off: the silence is the story

This is the measure most small business owners were watching, and the Budget papers do not contain it.

Here is the position as it actually stands. The $20,000 limit for assets first used or installed ready for use in the 2024–25 year was announced in last year's Budget. It has spent that entire year moving through Parliament, and it had still not received Royal Assent when this Budget was delivered.

And nothing in the 2025–26 Budget extends it past 30 June 2025. If no further law is made, the threshold reverts to the figure that sits permanently in section 328-180 of the *Income Tax Assessment Act 1997*: assets costing less than $1,000.

That is the whole rule. There is no discretion in it and no transitional grace.

What the difference is worth

Take a Robina building services company with aggregated turnover under $10 million, paying tax at the 25 per cent base rate. It buys $18,000 of plant. This is an example, not a client.

Installed ready for use by 30 June 2025, and assuming the pending bill receives assent: the full $18,000 is deductible in 2024–25. At 25 per cent, that is $4,500 of tax deferred into the current year.

Installed on 2 July 2025, on the law as it stands today: $18,000 is well above $1,000, so the asset goes into the small business pool. The ATO's simplified depreciation rules allow 15 per cent in the year the asset is first used and 30 per cent each year after. The first-year deduction is $2,700, worth $675.

Year one difference: $3,825 of cash flow, on the same asset, from the same supplier, at the same price.

Note what decides that number. Not a business decision. Two events outside the business entirely — whether a bill receives Royal Assent, and whether a future Parliament legislates an extension. That is an uncomfortable thing to build a capital plan on, and we would rather say so than pretend otherwise. Where the timing of an asset is material to a set of numbers, that is worth working through against the law as it currently stands rather than against an expectation.

Energy bill relief is the one thing that is automatic

The Budget extends the Energy Bill Relief Fund by six months at a cost of $1.8 billion, continuing rebates of $75 per quarter to 31 December 2025. For an eligible small business, that is $150 in total.

The Government's small business factsheet puts the number of eligible small businesses at around one million, and says cumulative relief since the 2023–24 Budget reaches up to $800. Do not confuse the two figures. The $150 is what this extension delivers; the $800 is three budgets added together.

There is no application. Your retailer applies the credit to the account. It is worth knowing about because it changes your electricity expense line, not because $150 over six months changes anything else.

The ATO received $999.0 million. That is the measure with a delivery date

Budget Paper No. 2 commits $999.0 million over four years to the ATO to extend and expand tax compliance activities, split across four programs:

• $717.8 million for the Tax Avoidance Taskforce, aimed at multinationals and large taxpayers
• $155.5 million to extend and expand the Shadow Economy Compliance Program, which targets under-reported income, worker exploitation and illicit tobacco
• $75.7 million for the Personal Income Tax Compliance Program
• $50.0 million from 1 July 2026 for the Tax Integrity Program, covering timely payment of tax and superannuation by medium and large businesses and wealthy groups

The Budget expects this to raise $3.2 billion over five years, including $31.0 million of unpaid superannuation to be paid back to employees.

Funding decisions of this kind do not need separate tax legislation to happen. That is precisely why compliance programs tend to arrive on schedule when tax changes do not. Of everything in this Budget, an expanded shadow economy program is the item a Gold Coast trades, hospitality or retail business is most likely to encounter. Contractor classification, cash takings and superannuation guarantee timing are the usual pressure points, and they are all questions of record-keeping rather than interpretation.

Announced, but not law

The rest of the small business content in this Budget is intention. It is worth reading, and worth not planning around.

Non-compete clauses. Treasury's announcement on non-compete clauses confirms a proposed ban for workers earning below the Fair Work Act high income threshold, currently $175,000, taking effect from 2027 following consultation and the passage of legislation. Your existing employment contracts are unaffected today.

Unfair trading practice protections would be extended to small businesses, subject to consultation with the states and territories.

Franchising. $7.1 million over two years for the ACCC to enforce the Franchising Code, plus a proposal to extend unfair contract term protections to businesses covered by that Code, again subject to consultation.

Draught beer excise. Indexation is paused for two years from August 2025, and the excise remission cap for brewers, distillers and wine producers rises from $350,000 to $400,000 from 1 July 2026. The package is costed at $165.0 million over five years.

The distinction running through all of this is the one that matters. An announcement is a statement of intent. A measure becomes law when a bill passes both Houses and receives Royal Assent, and its terms can change on the way through — the instant asset write-off is the proof.

Plan against the law that exists. Where a decision genuinely turns on an announced measure, the right move is to model both outcomes rather than assume one, and that is a conversation worth having as part of your year-end planning rather than in the last week of June.