The latest Australian Tax Laws for 2025–26 keep superannuation contribution caps the same—$30,000 for concessional (before-tax) and $120,000 for non-concessional (after-tax) contributions. Starting 1 July 2025, the Superannuation Guarantee rate will rise to 12%, which means employers will contribute more to your retirement savings.
The transfer balance cap, which limits how much you can hold in a tax-free retirement account, is increasing to $2 million. If you’re planning to sell investments, remember that capital gains tax still applies, so it’s wise to get advice before making big decisions under the updated Australian Tax Laws.
Self-managed super funds (SMSFs) will face stricter compliance and reporting rules this year, as the ATO increases oversight to make sure funds follow the rules and protect members.
What Are the Major Changes in Australian Tax Laws for 2025?
The Australian government has introduced several updates to Australian Tax Laws for 2025 aimed at making the system fairer and supporting everyday Australians. These changes reflect a broader focus on easing the cost of living and strengthening compliance across the Australian Tax Laws framework.
Here are the headline updates:
- Income tax brackets have been adjusted to better reflect fairness and reduce tax pressure on lower and middle-income earners.
- Medicare levy thresholds have been increased, meaning some taxpayers may pay less Medicare levy.
- Tax offsets and deductions have been revised to simplify claims and support specific groups.
- New rules on capital gains tax (CGT) withholding, especially for foreign property sellers.
- Payroll tax changes in states like Victoria are to support businesses.
- Stricter digital reporting and compliance requirements by the Australian Taxation Office (ATO).
The updated tax rules in Australia 2025 are designed to assist those with low and moderate incomes, promote home ownership, and ensure that everyone pays their fair share of taxes.
Need help understanding the 2025 Australian tax changes? ISM Accountants can help you make sense of the new rules and what they mean for your personal or business finances. Speak with a registered tax expert at ISM Accountants today.
Australian Income Tax Rates and Brackets for 2025–2026
Understanding your tax bracket is important because it determines how much tax you pay on your income. For the 2025–26 financial year, here are the tax rates for Australian residents:
Taxable income | Tax on this income |
0 – $18,200 | Nil |
$18,201 – $45,000 | 16c for each $1 over $18,200 |
$45,001 – $135,000 | $4,288 plus 30c for each $1 over $45,000 |
$135,001 – $190,000 | $31,288 plus 37c for each $1 over $135,000 |
$190,001 and over | $51,638 plus 45c for each $1 over $190,000 |
Important: Most taxpayers also pay a separate 2% Medicare levy on their taxable income.
Official Guide: Tax rates – Australian resident
What’s Coming Next?
The government has announced plans to reduce the 16% tax rate to 15% from 1 July 2026, and then further to 14% by 1 July 2027. This gradual reduction is designed to ease tax burdens on working Australians over time.
Key Tax Law Changes Effective in 2025: What’s New This Year?
If you want to stay on top of your finances, it’s important to know the latest changes in Australian tax laws for 2025. This year brings some important updates—from new rules on capital gains tax for foreign property sellers to changes in Medicare levy exemptions and payroll tax thresholds.
1. Capital Gains Tax (CGT) Withholding for Foreign Residents
The most recent tax legislation in Australia has raised the Capital Gains Tax (CGT) withholding rate for foreign residents selling real estate from 12.5% to 15%, effective January 1, 2025.
Furthermore, the $750,000 barrier for property value has been eliminated; thus, this withholding is now applied to all sales of real estate by foreign nationals. In order to prevent needless withholding, Australian residents who are selling real estate must now seek a clearing certificate from the ATO.
2. Medicare Levy Exemption for Lump Sum Payments
From 1 July 2024, certain lump sum payments paid in arrears (such as back pay) may be exempt from the Medicare levy if you meet specific ATO eligibility criteria. This means you could pay less of the Medicare levy on these payments.
3. Payroll Tax Updates (Victoria Example)
Victoria has increased its payroll tax-free threshold from $900,000 to $1 million, effective 1 July 2025, as part of the latest Australian tax laws aimed at supporting businesses. Payroll tax deductions for employers with salaries between $3 million and $5 million will be phased off, and as salaries get closer to $5 million, the threshold benefit will be gradually lost.
4. PAYG Withholding Adjustments
From 1 July 2025, new tax withholding schedules come into effect:
- The $1,200 threshold for lump sum E payments is removed.
- Thresholds for study and training loan repayments (HELP/HECS) are revised.
- Indexation adjustments affect superannuation transfer balance caps and untaxed plan caps.
Recommended Read: 3 WAYS TO GET FINANCIALLY FIT
Tax Return Guidelines for 2025: How to Claim Work-Related Expenses?
When preparing your 2025 tax return, understanding the latest Australian tax laws on work-related expenses can help you reduce your taxable income and increase your refund. The ATO tax updates provide clear guidance on what you can claim and how to prove your expenses. If you’re unsure about the process, using professional tax return services can make it easier to maximise your deductions and stay compliant.
Work-from-Home (WFH) Expenses
With more Australians working from home, the ATO allows two methods to claim WFH expenses:
- Fixed Rate Method: Claim 70 cents per hour worked from home. This covers electricity, internet, phone, and other running costs.
- Actual Cost Method: Claim your actual expenses, but you must keep detailed records and receipts.
Note: Items like coffee machines, personal furniture, or home office furniture are not claimable.
Motor Vehicle Claims
The ATO continues to scrutinise vehicle expense claims in 2025. To claim:
- Use the logbook method and keep a log for at least 12 consecutive weeks.
- Claim fuel, servicing, depreciation, and other running costs based on your work-related use percentage.
Other Common Work-Related Deductions
You may also be able to claim expenses for:
- Tools and equipment you use for work (must be necessary and not reimbursed).
- Self-education expenses related to your current job.
- Protective clothing and uniforms are required for work.
- Union fees or professional subscriptions.
Always keep receipts and records for these claims.
State-Specific Tax Developments for 2025: NSW and Victoria Highlights
Significant state-specific changes in Victoria and New South Wales (NSW) are part of the most recent Australian tax rules for 2025, and they have an impact on investors, businesses, and property owners. These updates show initiatives to promote investment, enhance tax compliance, and assist housing affordability.
New South Wales (NSW)
- Introduced a 50% land tax discount for build-to-rent housing developments.
- Removed labour force hour requirements for certain construction projects.
- Launched a critical minerals royalty deferral scheme to support mining investments.
Victoria
- Payroll tax-free threshold 2025 increased to $1 million.
- Revised definitions for regional businesses affecting payroll tax concessions.
Always check your state’s treasury website for the latest updates affecting your location.
Recommended Read: 9 Proven Payroll Tips for Small Business Owners
Resources for Taxpayers and Professionals
With the correct resources, it’s simpler to remain compliant and confident during tax season in Australia:
- The ATO’s online tools help with deductions, lodgements, and tax calculators.
- CPA Australia’s tax hub offers expert analysis and legal resources.
- For entrepreneurs and small business owners managing their own taxes, advice from accountants or tax experts is quite useful.
ATO Compliance & Digital Reporting Updates for 2025
The ATO has ramped up digital monitoring to improve tax compliance. Key focus areas include:
- Accuracy of work-from-home claims.
- Evidence for vehicle deductions (logbooks are essential).
- Mandatory adoption of Single Touch Payroll (STP) Phase 2 for most employers.
- Enhanced security and traceability through e-invoicing and myGovID.
Keeping digital, organised records will help you avoid audits and penalties.
How do These Latest Australian Tax Laws Impact Individuals?
Most Australians will see benefits from the latest tax changes in 2025, including:
- Paying less tax thanks to lower rates in some income brackets.
- Simpler claiming of certain deductions, making it easier to reduce your taxable income.
- More detailed record-keeping requirements when lodging your tax return.
- A greater need to keep digital records to meet compliance and avoid issues with the ATO.
The purpose of these changes is to encourage taxpayers to maintain accurate records while also making the tax system simpler and effective.
What should business owners and sole traders know regarding the latest Australian tax laws?
To improve tax compliance, the ATO has increased digital monitoring. Main areas of attention include:
- Fringe Benefits Tax (FBT) Obligations: Pay close attention to your FBT obligations, particularly those pertaining to meals and cars. The ATO is still committed to making sure these benefits are properly taxed and reported.
- PAYG and BAS Lodgements: Prepare for changes in Pay As You Go (PAYG) instalments and Business Activity Statement (BAS) lodgement thresholds. Updated income thresholds may affect when and how much you need to pay or report, so staying on top of these is crucial to avoid penalties.
- Asset Deductions and Instant Write-Offs: The instant asset write-off threshold remains at $20,000 for eligible small businesses (turnover under $10 million) through 2025–26. This allows you to immediately deduct the cost of eligible business asset purchases rather than depreciating them over time, helping cash flow.
- Company Tax Rates and Compliance: Company Tax Rates and Compliance: Australian companies face two main tax rates in 2025—25% for eligible small businesses and 30% for others. Understanding australian tax laws for small businesses is important, as the applicable rate depends on your business’s turnover and passive income tests. Knowing which rate applies helps with accurate tax planning and compliance.
- Increasing Costs and Fees: From 1 July 2025, ASIC fees for business name registration, company registration, and annual reviews will rise slightly. Also, the National Minimum Wage increases by 3.5%, and the superannuation guarantee rate rises to 12%, impacting payroll costs.
- End of Interest Deductibility for Tax Debts: From 1 July 2025, you can no longer claim tax deductions for interest charged on tax debts, making it more expensive to carry overdue tax liabilities.
- Growing Complexity and Compliance Focus: Tax compliance is becoming more complex, with the ATO increasing scrutiny on claims and reporting. Professional advice is highly recommended to navigate these changes, optimise your tax position, and avoid costly mistakes.
Superannuation and Investment Tax Updates
- Contribution caps remain the same: $30,000 for concessional (before-tax) and $120,000 for non-concessional (after-tax) contributions.
- The Superannuation Guarantee rate rises to 12% from 1 July 2025, increasing employer contributions.
- The transfer balance cap increases to $2 million, limiting the amount you can move into a tax-free retirement account.
- Capital Gains Tax (CGT) rules apply to investment gains—seek advice before selling major assets.
- Self-managed super funds (SMSFs) face tighter compliance and reporting requirements to meet ATO standards.
Recommended Read: Superannuation for Employers: A Complete Guide to Staying Compliant in Australia
Important Tax Dates and Deadlines for 2025
- 31 October 2025: Deadline for individual tax returns (unless using a registered tax agent).
- 28 October, 28 February, 28 April, 28 July: Quarterly BAS lodgement deadlines.
- Super guarantee contributions: Due quarterly, aligned with BAS dates.
Missing deadlines can lead to penalties, so set reminders early.
Final Thought
Both people and corporations will experience significant changes as a result of the most recent Australian Tax Laws for 2025. The secret to maximizing your benefits and maintaining compliance is to stay informed and up to date with these changes.
For personalised advice and support navigating these updates, contact ISM Accountant today. Our expert team can help you optimise your tax position and meet all ATO requirements with confidence. Don’t wait—reach out to ISM Accountant to make the most of the latest tax laws.
FAQs: Your 2025 Australian Tax Questions Answered
In 2025, key changes include updated 2025 income tax brackets, higher Medicare levy thresholds, new CGT withholding rules for foreign property sellers, payroll tax adjustments in some states, and increased digital reporting requirements by the ATO.
For residents, tax rates start at 0% for income up to $18,200 and go up to 45% for income above $190,000. A 2% Medicare levy applies separately.
Yes, if you earned income, received government payments, or want to claim deductions, you must lodge a tax return.
You can claim work-from-home expenses using a fixed rate (70 cents/hour) or actual costs with records. Vehicle expenses require a logbook. Other claims include work tools and some self-education expenses.
Contribution caps remain the same, but there are tighter compliance rules for SMSFs and capital gains tax implications on investments.
Foreign residents selling Australian property face a 15% CGT withholding on all sales, with no minimum property value threshold. Australian residents must get clearance certificates to avoid withholding.
Yes. NSW offers land tax discounts for build-to-rent projects, and Victoria has increased payroll tax thresholds. Always check your state’s treasury website for updates.
The ATO is targeting work-from-home claims, vehicle deductions, PAYG withholding accuracy, and enforcing digital reporting standards like Single Touch Payroll Phase 2.
