Major Changes from 1 July 2025 — How They’ll Impact Your Hip Pocket

WT Capital
Jul 2
3 min read

From tax cuts to superannuation tweaks and welfare increases, the start of the new financial year on 1 July 2025 is set to bring a raft of changes for millions of Australians. Whether you’re a worker, retiree, parent or business owner, here’s what to watch — and how it could affect your wallet.

1. Stage 3 Tax Cuts: More Money in Your Pay Packet

Arguably the biggest headline is the long-awaited Stage 3 tax cuts, finally coming into effect. Under these changes:

The 19% tax rate falls to 16% for incomes between $18,201 and $45,000.
The 32.5% rate drops to 30% and now covers incomes between $45,001 and $135,000.
Higher brackets rise with the 37% threshold moving to $135,001, and the 45% rate only applying above $190,001.

Treasury estimates about 13.6 million Australians will pay less tax. For example:

Someone earning $80,000 could save roughly $1,679 a year.
A worker on $100,000 may save around $2,179.

This means higher take-home pay for most working Australians, potentially boosting household spending and savings.

“These tax cuts will put more money back into people’s pockets at a time when cost-of-living pressures remain high,” notes Treasurer Jim Chalmers.

2. Superannuation Guarantee Rises Again

If you’re employed, your superannuation guarantee (SG) contribution is ticking up once more:

From 11% to 11.5% of ordinary time earnings.

For someone earning $80,000, that’s an extra $400 a year going into super. It’s part of the government’s plan to gradually lift SG contributions to 12% by July 2026. While good news for retirement savings, it could also modestly increase payroll costs for employers.

3. Paid Parental Leave Expands

Parents are big winners from 1 July, with significant changes to Paid Parental Leave:

The scheme grows to 22 weeks (up from 20 weeks), heading to 26 weeks by 2026.
Families can split the leave between parents however they wish, encouraging greater gender equity in caregiving.

This offers families more flexibility and financial support during the critical early months of a child’s life.

4. Energy Bill Relief

Millions of households will receive help with stubbornly high energy bills:

Households will get $300 in energy bill relief, automatically credited to their electricity accounts in quarterly instalments.
Small businesses will receive $325 in total relief.

Although energy prices remain high, this measure aims to cushion cost-of-living pressures, especially during winter when heating costs spike.

5. Welfare Payments Increase

Social security payments will rise in line with indexation:

The base rate for JobSeeker and other working-age payments will climb by $19.10 a fortnight for singles.
Parenting Payment Single recipients will get an additional $26.10 a fortnight.

These increases aim to keep pace with rising living costs, though some advocates argue more substantial boosts are needed.

6. Student Loan Indexation Drops

In welcome news for former students:

HECS-HELP indexation is slashed from last year’s 7.1% to just 3.2% in 2025.

This will slow the pace at which student debts grow. For someone owing $25,000, the difference in indexation alone means saving over $1,000 compared with last year’s spike.

7. New Medicare Levy Thresholds

Medicare levy thresholds will increase to reflect higher living costs:

Singles pay no levy until they earn above $26,000 (up from $24,276).
Family thresholds rise to $43,846, plus additional amounts per child.

This change ensures lower-income earners aren’t pulled into paying the Medicare levy prematurely.

8. Changes to Aged Care Fees

Older Australians in residential care will see changes:

Daily maximum means-tested care fees will rise slightly to $436.80.
The annual cap on means-tested fees will increase to $33,309.29.

While these caps are indexed, they still mean some older Australians could pay more for aged care services.

What Should You Do?

Here’s how you might prepare for 1 July:

✅ Check your tax position. Use ATO calculators or speak to your tax agent to estimate your new tax savings.

✅ Review your super contributions. Ensure you’re not hitting contribution caps with the SG increase.

✅ Plan parental leave. New parents should talk to employers early to maximise benefits under the expanded scheme.

✅ Budget for energy bills. Factor in rebates but continue shopping around for competitive energy deals.

✅ Track welfare payments. If you receive benefits, check your new entitlements.

✅ Review your HECS-HELP debt. Consider voluntary payments if your debt is significant and you wish to reduce future indexation impacts.

Final Word

From tax relief to higher super savings and energy bill support, the changes starting 1 July 2025 could leave many Australians a little better off — though cost-of-living pressures remain a challenge. It’s a timely opportunity to review your finances and make sure you’re getting every benefit you’re entitled to.