The absence of a key tax measure for small businesses and flatlining business investment has made this budget an underwhelming one for the business community.

Business NSW – the state’s peak business organisation – welcomes additional income tax cuts, however, and a further $150 in energy rebates for households and small businesses.

“Being so close to the Federal Election, this budget lacks the vision that business - and the Australian economy more broadly - needs right now. There is scant mention of business, tax reform and the need to improve lagging productivity,” Business NSW CEO Daniel Hunter said.

“The Federal Government has more than $1 billion stashed in its back pocket for 2025-26 under ‘decisions taken but not announced’.

“The Treasurer rightly said tonight that ‘the private sector is resuming its rightful place as the main driver of this growth’. We hope that both Government and Opposition have more substantial announcements on business in the upcoming election campaign.

“The instant asset write off is a key measure allowing businesses to purchasing productivity-improving equipment, however the Federal Government has failed to announce it in the 2025-26 Budget papers.”

From July 1, 2026, every taxpayer will receive an extra tax cut of up to $268. There will be a further tax cut of up to $268 from July 1, 2027.

“We warmly welcome the announcement of additional income tax cuts. These are important to households and have positive flow-on effects for businesses,” Mr Hunter said.

“The Federal Government estimates the cuts will reduce tax receipts by $17.1 billion over the five years from 2024–25.

“Small and medium-sized enterprises must be at the centre of any serious economic growth agenda and at the forefront of Australia’s response to rapidly changing global trade and geopolitical conditions.

“Just as households struggle with a once in a generation cost of living crisis, SMEs face a cost of doing business crisis.”

The Budget forecasts a $42.1 billion deficit for 2025-26 – the 14th deficit in the past 17 years and a significant increase in the $27.6 billion deficit for 2024-25.

Total business investment growth will be 1.5% for 2025-26 (it was forecast at 1% for 2024-25) and will remain at 1.5% in 2026-27. For context, it was 8.3% in 2022-23.

“Communities across NSW benefit from supporting small businesses. Local jobs, infrastructure, and community programs are all fuelled by money spent locally,” Mr Hunter said.

“Local businesses support local sports teams, volunteer at school canteens, and keep main streets vibrant. Every dollar spent locally creates a ripple effect that benefits the entire community.”

Key budget items:

Tax cuts: From July 1, 2026, every taxpayer will receive an extra tax cut of up to $268. There will be a further tax cut of up to $268 from July 1, 2027.

From 1 July 2026, the Federal Government will reduce the 16 per cent tax rate to 15 per cent (for income between $18,201 and $45,000). From 1 July 2027, this tax rate will be reduced further to 14 per cent. The new tax cuts are estimated to decrease receipts by $17.1 billion over the five years from 2024–25.

Energy: $150 energy rebates for eligible small businesses from July 1 until the end of the calendar year ($75 per quarter). This is half what the government offered last year.

Instant asset write-off: This crucial measure has not been included in the 2025-26 Federal Budget. Last year it was announced that businesses with turnovers capped at $10 million can deduct $20,000 from all eligible assets until 30 June 2025. That is also yet to be legislated by the Federal Government.

Non-compete clauses: From 2027 there will be a ban on non-compete clauses will apply to workers earning less than the high-income threshold in the Fair Work Act (currently $175,000).

National Broadband Network: $3 billion to finalise the NBN rollout, aiming to improve internet connectivity across Australia.

Western Sydney Infrastructure: $1 billion to expand and secure additional rail corridors, not only between Leppington and Bradfield, but also linking the Bradfield City Centre to the rapidly growing Macarthur region.

Infrastructure: $465 million for NSW to plan for regional projects and fix choke points, including $250 million to upgrade Mona Vale Road and $115 million to reduce travel times on Terrigal Drive. There will also be funding for upgrades to Homebush Bay Drive as part of a $3.5 billion fund over five years to 2028–29 for “unavoidable policy decisions since MYEFO”.

Boost to the Help to Buy scheme: The Government will increase its equity investment in the Help to Buy program by $800 million, raising income and property price caps to align the average house price in each state or territory. This will provide first home buys greater choice and opportunity.

Manufacturing: $750 million investment in the existing $1.7 billion Future Made in Australia Innovation Fund will support the development of new low-emissions technologies.

The Green Aluminium Production Credit: An investment of $2 billion, set to be available from 2028-29, will support Australia’s aluminium smelters to transition to renewable electricity.

Clean energy manufacturing: $500 million from the Innovation Fund to provide merit-based grants for clean energy manufacturing opportunities, including projects which build new capability in wind tower steel fabrication, battery storage, hydrogen electrolysers, energy efficiency and electrification technologies and other critical components, like cables.

Housing: $54 million to support state and territory governments in accelerating prefabricated and modular home construction. The Federal Government will also boost the Help to Buy scheme by increasing income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents. New property price caps are now $1.3 million for Sydney and “regional centres” and $800,000 for other regions.

Apprentices: Eligible apprentices get $10,000 if they train up in the housing sector. There will also be 100,000 free TAFE places annually from 2027.

Payments: Promote prompt 20-day payment times for contractors and subcontractors in the construction industry for work completed for Government Business Enterprises undertaking major construction activity, such as the NBN Co Ltd and Western Sydney Airport (WSA) Co Ltd.

Alcohol indexation: Pausing indexation on draught beer excise by increasing support available under the existing Excise remission scheme for manufacturers of alcoholic beverages and Wine Equalisation Tax Producer rebate, estimated to decrease receipts by $165.0 million over five years from 2024–25. 
  
About Business NSW

Formerly the NSW Business Chamber, Business NSW is the peak policy and advocacy body which has been representing businesses in NSW since 1826. We represent almost 50,000 businesses.

MEDIA CONTACT: BEN PIKE – 0429 993 822