Happy new financial year! It’s a great time to take stock and review your financial plan. Whether you’re looking to make the most of new tax cuts, changes to superannuation, or government support, understanding what’s ahead can help you stay on track and make confident decisions. Here’s a straightforward guide to the main updates (based on what we know so far) and what they mean for everyday Australians.

Personal Income Tax

  • Tax Rates: There is no change from 25FY to 26FY. However, it’s worth noting that from 1 July 2026 (27FY), the tax rate for income between $18,201 and $45,000 drops from 16% to 15%. This is part of a series of tax cuts, with a further reduction to 14% planned from July 2027 (28FY).
  • Medicare Levy Surcharge (MLS) Thresholds: For FY26, the main change affecting income tax is the increase in MLS thresholds. Single individuals now need to earn over $101,000 (up from $97,000) and families over $202,000 (up from $194,000) before they become liable for the MLS if they do not have appropriate private hospital cover. This gives higher-income earners a bit more room before the surcharge applies.

Superannuation

  • Super Guarantee Rate: From 1 July 2025, employers must pay 12% of your wage into your super fund, up from 11.5%.
  • Payday Super (Proposed): There’s a plan for employers to pay super at the same time as wages from 1 July 2026, but this isn’t law yet.
  • Super on Paid Parental Leave: For babies born or adopted from 1 July 2025, super will be paid on government parental leave, with payments starting from July 2026.
  • Contribution Caps: The cap for before-tax (concessional) contributions stays at $30,000, and the after-tax (non-concessional) cap remains at $120,000 for FY26.
  • Transfer Balance Cap: The limit on how much you can move into a tax-free retirement account rises to $2 million from 1 July 2025.
  • Tax on Large Super Balances (Proposed): There’s a proposal to tax future earnings on super balances above $3 million at 30% (up from 15%) from July 2025, but this isn’t yet law.

Aged Care

  • Support at Home Program: From 1 November 2025, the new Support at Home program will replace previous home care schemes, offering tailored support to help older Australians stay independent at home. Funding is available across eight levels, up to about $78,000 per year, including support for home modifications and equipment.
  • Residential Aged Care Fees and Caps: For those entering residential aged care from 1 November 2025, a new means-tested services contribution will apply, capped at a daily amount and with a lifetime cap. Clinical care remains fully subsidised by the government.
  • Room Price Cap: The maximum price for a room in an aged care facility will rise to $750,000 from 1 November 2025 and will be indexed over time. An exit fee will also be introduced, capped at 10% of the Refundable Accommodation Deposit over five years.
  • Refundable Accommodation Deposit (RAD) Retention: From July 1, 2025, aged care providers will be allowed to retain a portion of RADs for a maximum of five years. This retention is capped at 2% per year, meaning a maximum of 10% of the RAD could be retained. This change impacts new residents entering aged care from this date onwards.
  • No Worse Off Principle: If you’re already in care before these changes, your fees and arrangements will not change unless you move to a new provider.

Centrelink and Social Security

  • Parental Leave Pay: The daily rate for Parental Leave Pay is set to rise from $189.62 a day for FY25, with new rates expected from 1 July 2025. The number of paid days will also go up.
  • Payment Increases: Many Centrelink payments and thresholds will go up to match the rising cost of living.
  • Rent Assistance: There will be significant increases to Commonwealth Rent Assistance.
  • JobSeeker & Parenting Payment: More people will be eligible for JobSeeker, and there’s extended support for single parents.

Interest Rates and Inflation

  • Interest Rates: As of the most recent announcement, the Reserve Bank’s cash rate is 3.85%. Forecasts suggest it may drop to around 2.85% in 2026, but this depends on economic conditions.
  • Inflation: Inflation is expected to settle within the Reserve Bank’s target range of 2 – 3%, staying around 2.75% through 2025–2026.

Housing and Cost of Living

  • Help to Buy Scheme: This scheme lets eligible buyers get up to 40% of their home’s price from the government, with higher income and property price caps, in exchange for an equivalent share of the property’s equity.
  • First Home Guarantee: From 1 January 2026, income limits for the First Home Buyers Guarantee will be removed, allowing first-time buyers to purchase with a 5% deposit and no lenders mortgage insurance.
  • PBS Co-payment: From 1 January 2026, the cost of medicines under the Pharmaceutical Benefits Scheme drops to $25.
  • Minimum Wage: From 1 July 2025, the National Minimum Wage increased by 3.5% to $24.95 per hour or $948.00 per 38-hour week, with a similar percentage increase applied to all modern award minimum wages.

Tips for Financial Planning in FY26

  • Review Your Budget: Adjust your spending and saving plans to reflect changes in tax and living costs.
  • Understand Tax Changes: Know how the new tax cuts affect your take-home pay and update your tax withholding if needed.
  • Check Super Contributions: Make sure you or your employer are contributing the right amount to your super, especially with the higher guarantee rate and possible payday super changes.
  • Manage Debts: With interest rates possibly falling, it might be a good time to review your mortgage or other loans and consider refinancing.
  • Seek Advice: If your finances are complicated, speak to us to make the most of the changes.

It’s important to keep an eye on updates from the government, the ATO, Services Australia, and the Reserve Bank, or simply speak to us, as rules and rates can change. Staying informed will help you make the best decisions for your financial plan.