Federal budget 2025-26: What it means for older Australians 💰🧐
The Federal Budget 2025-26 offers a mix of immediate relief and ongoing challenges for older Australians, seniors, and retirees. While it includes measures that could provide short-term benefits, it lacks a clear long-term fiscal plan. The deficit continues to grow, and public debt is expected to hit record levels, without concrete steps to address these issues.
For older Australians, the budget provides some hope, but concerns about the high cost of living and the strain on healthcare and aged care systems persist. Those on fixed incomes may see some immediate relief, but the lack of long-term planning raises uncertainty about the future.
While there are positive measures in healthcare, aged care, financial relief, and housing, the overall fiscal strategy questions the sustainability of these efforts. The budget fails to offer a comprehensive solution to the growing pressures of an aging population and rising public debt.
Here’s a breakdown of the budget’s key measures for older Australians and seniors.
Increased Medicare and Healthcare Support
The government’s focus on strengthening Medicare continues, with several initiatives aimed at making healthcare more accessible to seniors, especially those on lower incomes.
- $7.9 Billion for Bulk Billing: The budget allocates a record $7.9 billion to bolster Medicare, aiming to improve bulk billing rates and ensure more seniors can access free GP visits.
- 50 New Medicare Urgent Care Clinics: An additional 50 Medicare Urgent Care Clinics will be established, bringing the total to 137 across the nation. This expansion ensures that 4 in 5 Australians, including many older Australians, will be within a 20-minute drive of urgent medical care, reducing pressure on emergency departments.
- Cheaper Medicines: The cost of Pharmaceutical Benefits Scheme (PBS) medicines will decrease from $31.60 to $25 starting in January 2026, which is particularly beneficial for seniors who rely on regular prescriptions for chronic conditions.
- Support for Women’s Health: The budget introduces a new women’s health package, including access to new menopausal hormone therapies and support for other health issues affecting older women.
- Medicare Levy Low-Income Threshold Increase: The threshold for the Medicare levy will be increased, exempting over 1 million low-income households, seniors, and pensioners from paying the levy or reducing their payments. Eligible seniors could save up to $122 annually. However, Treasury officials confirmed the levy was changed almost every year in line with inflation so this really isn’t anything new.
Pensions: Stability with Deeming Rate Left Unchanged
For nearly one million older Australians, the lack of change to the deeming rate in the budget is a relief. The deeming rate plays a critical role in determining access to the pension by assessing how much income an older Australian is earning on their investments.
- Deeming Rate Unchanged: The benchmark deeming rate remains at 2.25%, which has not been altered since the Morrison government in 2020. This rate is considerably lower than the interest rates on most conservative investments, such as term deposits. For many retirees, this rate has effectively acted as a “giveaway,” allowing them to access more pension support than they would otherwise be entitled to if the deeming rate were adjusted to reflect current investment conditions.
- No Immediate Super Tax on $3m Earnings: The anticipated superannuation tax on earnings above $3 million based on unrealised gains was notably absent from the budget. Despite past proposals with significant revenue forecasts attached, it seems this measure is unlikely to pass through parliament in its current form. The super tax will likely be restructured if it does eventually make it through, leaving some uncertainty about future superannuation policy changes.
Support for Aged Care
Aged care continues to be a significant area of focus, with the government making efforts to implement reforms, though concerns about adequacy remain.
- $291.6 Million for Aged Care: The government has committed $291.6 million over five years to support the implementation of recommendations from the Royal Commission into Aged Care Quality and Safety, helping to enhance the delivery of aged care services.
- $2.6 Billion for Aged Care Worker Wage Increases: To address workforce shortages and improve care quality, the government has allocated $2.6 billion for wage increases for aged care workers. This funding is critical in improving the overall standard of care for seniors.
- Aging in Place: The budget continues to support aging in place by investing in home care services, allowing seniors to remain in their homes for longer. This is a key priority for older Australians who prefer to stay in familiar surroundings as they age.
Financial Relief for Older Australians
Older Australians, particularly those living on fixed incomes, will benefit from several measures designed to provide immediate financial relief.
- Tax Cuts: From July 1, 2026, the tax rate for the lowest tax bracket ($18,201 and $45,000) will be cut from 16 per cent to 15 per cent. That’s one cent less for every dollar you earn between $18,201 and $45,000. Then, on July 1, 2027, the rate will fall again to 14 per cent. The other tax brackets stay the same. But let’s be honest, $5 per week commencing in July next year really won’t do much (especially after inflation).
- Energy Bill Relief: The government is extending $75 energy rebates through the end of 2025. This relief is particularly valuable for seniors who are vulnerable to rising electricity costs, especially on fixed incomes.
Enhancing Access to Housing for Older Australians
Housing affordability continues to be a critical issue for older Australians, and the budget introduces measures to address this concern.
- Housing Construction Support: The government is investing in the construction of new affordable homes, which could benefit seniors looking to downsize or relocate. This initiative aims to make housing more accessible and affordable for older Australians.
- Increased Rent Assistance: The government’s increase in rent assistance will be a key relief measure for older Australians who are renting, ensuring that they can better manage housing costs in retirement.
Superannuation and Retirement Savings
The government’s approach to superannuation and retirement savings remains largely unchanged, though some key adjustments will benefit seniors.
- Superannuation Caps and Thresholds: The government has left superannuation caps and thresholds in place, but importantly, these caps will be indexed to inflation starting later this year. This will allow retirees to accumulate more in tax-free superannuation savings. For instance, the cap on tax-free super balances will rise from $1.9 million to $2 million starting July 1, 2025.
- No Changes to Pre-Tax Contribution Cap: The pre-tax contribution cap remains at $30,000 per year. This ensures that seniors can continue contributing to their superannuation savings, but it may not be enough to accommodate the growing retirement savings needs of many retirees.
- Super Tax Proposal Stalled: The proposed 15% tax on superannuation earnings over $3 million has not appeared in the budget and remains stalled in parliament. This gives some certainty to retirees with larger super balances, at least for now.
Support for Seniors with Chronic Conditions
Seniors living with chronic health conditions will benefit from the expansion of healthcare services and home care options.
- Chronic Disease Management: With increased bulk billing clinics and expanded Medicare coverage, seniors with chronic diseases like diabetes and heart disease will have better access to ongoing care without incurring additional costs.
- Home Care Services: The continued investment in home care services is a critical measure for seniors who wish to remain in their homes as they age, rather than moving into residential care. This option helps to maintain seniors’ independence and quality of life.
Improved Access to Legal and Social Services
The budget also addresses the need for improved legal and social services for older Australians, particularly those in vulnerable situations.
- $4 Billion for Legal Services: Over $4 billion is being invested to enhance legal services, which will include support for older Australians dealing with elder abuse and other legal issues.
- Social Safety Net Strengthened: The government’s investment in social security programs will help ensure that older Australians have the support they need during retirement, providing additional financial security as they age.
Wrapping Up: A Mixed Outlook for Older Australians
While the Federal Budget 2025-26 brings several positive measures for older Australians—such as tax relief, healthcare improvements, and aged care support—there is little addressing the long-term fiscal challenges posed by an aging population. Measures like the increase in rent assistance and energy bill relief will offer immediate relief to seniors, but the government’s failure to implement a comprehensive, long-term strategy to address the needs of older Australians leaves uncertainty about future sustainability. The absence of substantial reforms to pension eligibility and superannuation tax policies signals that the government is opting for short-term fixes rather than bold, structural changes. For now, older Australians can expect some relief, but a clearer long-term vision is needed to secure their financial and healthcare future.
You can read the full budget report here.
