Analysis of 2025 Budget and Albanese Government Tax and Welfare Changes

Abstract

This paper analyses the distributional impact of the Albanese Government's Commonwealth Budgets (2022 to 2025) and also considers the impact of the 2026 and 2027 tax cuts outlined in the 2025 Commonwealth Budget. The analysis of the impacts of the Commonwealth Budgets is limited to changes in the personal Income tax and social security policies. It is estimated that the Albanese government added around $7.5 billion per year in 2025-26 to household disposable income through changes to the tax and welfare system. Lower- and middle-income households were the main beneficiaries while high income households were the most likely to be worse off through the altered 'Stage 3 Tax Cuts'. The 2026 and 2027 tax cuts will benefit middle- and high-income households the most in dollar terms but mostly middle-income households with regard the per cent of income.