Linkedin
Facebook
Email
more
The ACT Government’s 2025–26 Budget, handed down by Treasurer Chris Steel, sets out a clear plan to manage growing service pressures—particularly in healthcare—while laying the foundation for long-term budget sustainability.
The Budget responds to a projected deficit of $1.1 billion in 2024–25, with a commitment to reduce this to $425 million by 2025–26, and return to a modest surplus by 2028–29.
Economic analysis
Healthcare remains the largest area of expenditure, accounting for about a third of the territory’s Budget. To help meet rising costs and fund additional investments—including a new northside hospital, health centres across Tuggeranong, Gungahlin and the inner south, and a masterplan for Canberra Hospital—the Government has introduced a $250 annual health levy on all rateable properties. This measure is expected to raise over $200 million across four years and will remain in place until at least 2029–30. The ACT also highlighted that federal contributions to healthcare are expected to decline from 37 to 33 per cent of the total bill in the coming year, which is below the longer-term 45 per cent target.
To support overall Budget sustainability, general rates will rise by 3.75 per cent, with additional increases to the Safer Families Levy and the Emergency Services Levy. Rate increases will vary by suburb depending on land value, with higher increases applying to homes valued above a new $1 million threshold and to commercial properties over $5 million in unimproved value. These adjustments are intended to align contributions with property value and service demand.
Tax reform also extends to the business sector, with the payroll tax threshold lowered from $2 million to $1.75 million, broadening the number of small and medium enterprises contributing to the system. A range of other fees and charges—such as parking, driver licensing and occupational permits—are also being adjusted to reflect cost recovery and support the funding of ongoing services.
As part of its climate and sustainability reforms, the Budget transitions away from some previous incentive programs. From September 2025, electric vehicles will no longer be exempt from stamp duty, instead attracting a minimum rate of 2.5 per cent, which will increase based on emissions and vehicle value. Vehicles priced above $80,000 will face an 8 per cent duty. Additionally, new loans under the Sustainable Household Scheme will carry a 3 per cent interest rate, replacing the previous zero-interest offering. Solar panels will be removed from this scheme and will now be accessed through the Home Energy Support Program.
Housing is another major focus area. The Government aims to deliver 30,000 new homes by 2030, with 26,000 planned over the next five years. This will be supported by increased land releases—especially for medium- and high-density housing—expanded affordable housing initiatives, and continued planning reforms. A $145 million housing package has been announced, which includes new Build-to-Rent projects, additional social and community housing, and expanded training subsidies to support skills development in critical construction trades. A minimum of 20 per cent of new land releases will now be allocated to affordable and social housing, up from the previous 15 per cent.
The Budget continues to provide targeted relief to support vulnerable Canberrans. This includes a permanent $50 increase to the Electricity, Gas and Water Rebate (now $800), expanded access to community housing, and a $1.5 million fund to support food relief services. Apprentices and trainees will also receive direct payments, with an additional boost for first-year participants. These measures aim to ease pressures for those most affected by rising living costs while continuing to invest in future workforce capability.
The overall fiscal strategy reflects a shift toward long-term service sustainability, with a broader tax base and increased own-source revenue. The Government has stated that while some households and businesses will be asked to contribute more, these changes are necessary to maintain the quality of essential services and manage the needs of a growing city. The success of this approach will rely on continued economic stability, careful cost management, and timely delivery of planned infrastructure and housing projects.
KEY AREAS
The third stage of tax reform, spanning from 2021–22 to 2025–26, has steadily advanced the shift from conveyance duty to general rates. However, the pace has been deliberately moderated in response to community pressures stemming from COVID-19 and rising living costs.
To support this transition, increases in general rates above the Wage Price Index (WPI) are being used to offset reductions in inefficient taxes. Notably:
- The lowest marginal tax rate for home buyers has dropped from 1.2% to 0.28%.
The commercial duty threshold has increased from $1.5 million to $2 million.
Looking ahead, the fourth stage of tax reform is scheduled to commence in 2026–27, with further details to be announced in the next Budget.
Own Source Taxation Initiatives: A Balanced Revenue Strategy
Principles and Purpose
This Budget introduces a carefully calibrated package of revenue measures aimed at strengthening the Territory’s fiscal position. These initiatives are grounded in the core principles of tax policy: efficiency, equity, simplicity, and stability.
Addressing Fiscal Constraints
Given the ACT’s limited tax base—exacerbated by vertical fiscal imbalance and a lack of mineral resources—the government will continue to rely on broad-based taxes. This approach ensures:
- A more equitable distribution of tax impact across the community.
- Reduced burden on specific groups.
- Minimized economic distortions.
Payroll Tax Reforms
Since 2016, the ACT has broadened its payroll tax base by:
- Lowering the payroll threshold and tax rate for small to medium local businesses.
- Maintaining one of the highest thresholds in Australia.
- Offering a lower tax rate, ensuring businesses with payrolls just under $4 million continue to pay less than before.
Health Levy and Property Tax Adjustments
A new four-year Health Levy has been introduced for all residential, commercial, and rural properties. Revenue from this levy is earmarked exclusively for funding the local health system.
Additionally, reforms to general rates are being implemented, including:
- Higher marginal property value thresholds.
- Measures designed to enhance fairness and sustainability in property taxation.
The ACT Government will implement significant changes to duty concession schemes starting 1 July 2025, aimed at improving housing affordability and supporting vulnerable groups.
Updated Price Thresholds
From 2025–26, the price threshold for the following schemes will increase to $1,020,000:
- Home Buyer Concession Scheme
- Pensioner Duty Concession Scheme
- Disability Duty Concession Scheme
These thresholds will be indexed annually to the Canberra Consumer Price Index (CPI) and rounded to the nearest $5,000. The same threshold will apply to Off-the-plan and RZ1 unit duty exemptions.
Tax Reform: Lower Conveyance Duty Rates
As part of Stage Three of the ACT Tax Reform program, the lowest marginal conveyance duty rate for homebuyers will be reduced from 0.4% to 0.28% in 2025–26. This change continues the Government’s commitment to reducing inefficient taxes and improving equity in the housing market.
Financial Impact
The initiative is expected to result in the following revenue and service cost impacts:
| Year | 2025–26 ($'000) | 2026–27 ($'000) | 2027–28 ($'000) | 2028–29 ($'000) | Total ($'000) |
|---|---|---|---|---|---|
| Revenue Forgone | 2,193 | 53 | 53 | 53 | 2,352 |
| Net Cost of Services | 2,193 | 53 | 53 |
Contribution to Wellbeing
This initiative supports the ACT’s wellbeing goals, particularly in the domains of Economy and Housing and Home, by making home ownership more accessible and reducing financial barriers for eligible buyers.
The ACT Government is introducing a series of sustainable revenue measures to support essential services and infrastructure. These initiatives are designed to address rising costs and ensure long-term fiscal stability while contributing to the wellbeing domains of Economy and Health.
1. Health Levy to Support the Public Health System
To address increasing demand on the public health system and a declining Commonwealth Contribution Rate, the Government will introduce a $250 Health Levy on all rateable properties—residential, commercial, and rural—starting in 2025–26.
| Year | Revenue ($'000) | Net Cost of Services ($'000) |
|---|---|---|
| 2025–26 | 0 | -50,000 |
| 2026–27 | 51,000 | -51,000 |
| 2027–28 | 51,900 | -51,900 |
| 2028–29 | 52,800 | -52,800 |
| Total | 205,700 | -205,700 |
This initiative directly supports the Economy and Health wellbeing domains.
2. Ambulance Levy Increase
Beginning 1 January 2026, the Ambulance Levy paid by private health insurers will increase by 10%. This measure aims to sustainably fund public services and infrastructure for the Canberra community.
| Year | Revenue ($'000) | Net Cost of Services ($'000) |
|---|---|---|
| 2025–26 | 1,670 | -1,670 |
| 2026–27 | 3,519 | -3,519 |
| 2027–28 | 3,709 | -3,709 |
| 2028–29 | 3,893 | -3,893 |
| Total | 12,791 | -12,791 |
This initiative contributes primarily to the Economy wellbeing domain.
To support long-term fiscal sustainability and align with environmental and economic goals, the ACT Government is introducing targeted changes to motor vehicle duty and payroll tax. These initiatives contribute to the wellbeing domain of Economy.
1. Motor Vehicle Duty Reform
Effective 1 September 2025, the Government will reduce concessions for zero-emission vehicles and introduce a minimum 2.5% duty on new transactions. Duty rates will increase proportionally based on vehicle emissions and value.
Additionally, a new 8% tax rate will apply to the portion of a vehicle’s value exceeding $80,000.
| Year | Revenue ($'000) | Net Cost of Services ($'000) |
|---|---|---|
| 2025–26 | 19,170 | -19,170 |
| 2026–27 | 25,300 | -25,300 |
| 2027–28 | 27,300 | -27,300 |
| 2028–29 | 29,200 | -29,200 |
| Total | 100,970 | -100,970 |
Further details are available in Chapter 3.5: Revenue.
2. Payroll Tax Adjustments
To enhance revenue sustainability, the Government will implement changes to payroll tax beginning in 2026–27. While there are minor administrative expenses in 2025–26, significant revenue generation begins the following year.
If your payroll is between $2m and $50m, there is no change, and you will continue to be taxed at the current rate of 6.85 per cent.
However, from next Tuesday, 1 July 2025:
- if your total payroll is between $1.75 million and $20 million, your payroll will be taxed at 6.75 per cent; and
- if your total payroll is between $50m and $100 million, your payroll will be taxed at 7.25 per cent (up from 7.1 per cent); and
- if your total payroll is more than $100m, you will be taxed at 7.75 per cent (up from 7.35 per cent).
The rates have been revised further from 1 July 2026 with more businesses being affected by payroll tax
| Year | Revenue ($'000) | Expenses ($'000) | Net Cost of Services ($'000) |
|---|---|---|---|
| 2025–26 | 0 | 64 | 64 |
| 2026–27 | 52,900 | 260 | 52,640 |
| 2027–28 | 57,200 | 263 | 56,937 |
| 2028–29 | 61,900 | 267 | 61,633 |
| Total | 172,000 | 854 | 171,146 |
GP Wages Exemption: An employer that is a designated medical practice is exempt from the requirement to pay payroll tax in relation to wages paid or payable to a general practitioner for medical services that are bulk-billed or delivered under Part V of the Veteran’s Entitlements Act 1986 (Cwlth) or under the Workers Compensation Act 1951. See here
The payroll tax surcharge rate has increased to:
- 0.5 per cent on ACT taxable wages, where an employer is above the payroll tax threshold for businesses with Australia-wide wages above $50 million per annum or $4,166,666.66 monthly; and
- 1 per cent on ACT taxable wages, where an employer is above the payroll tax threshold for businesses with Australia-wide wages above $100 million per annum or $8,333,333.33 monthly.
From 1 July 2026:
- the payroll tax-free threshold will reduce from $2.0 million to $1.75 million;
- the tax rate of 6.85 per cent will reduce to 6.75 per cent; and
- a new surcharge of 0.1 per cent will apply on all taxable wages for employers with Australia-wide (or group Australia-wide) wages between $20.0 million and $50.0 million.
To ensure the continued delivery of essential public services and infrastructure, the ACT Government is introducing new revenue measures targeting high-value residential properties and utilities infrastructure. These initiatives support the wellbeing domain of Economy.
1. Residential General Rates Reform
Beginning in 2025–26, a new threshold will apply to high-value residential non-unit properties with an average unimproved value (AUV) of $1 million or more. These properties will be taxed at a rate of 0.5734% in the first year.
This reform is designed to increase own-source taxation and ensure a fairer contribution from higher-value properties.
| Year | Revenue ($'000) | Net Cost of Services ($'000) |
|---|---|---|
| 2025–26 | 4,000 | -4,000 |
| 2026–27 | 4,300 | -4,300 |
| 2027–28 | 4,600 | -4,600 |
| 2028–29 | 4,900 | -4,900 |
| Total | 17,800 | -17,800 |
2. Utilities Network Facilities Tax Increase
The Government will also increase the Utilities Network Facilities Tax on owners of network infrastructure located on ACT land. These increases will exceed the Wage Price Index (WPI) annually, starting in 2025–26, to ensure sustainable funding for public services.
| Year | Revenue ($'000) | Net Cost of Services ($'000) |
|---|---|---|
| 2025–26 | 1,300 | -1,300 |
| 2026–27 | 2,600 | -2,600 |
| 2027–28 | 2,600 | -2,600 |
| 2028–29 | 2,600 (est.) | -2,600 (est.) |
| Total | 9,100 | -9,100 |
ADDITIONAL INFORMATION
The Government is supporting the delivery of more homes for Canberrans where and how they want to live.
The Budget supports a wide range of practical initiatives to boost supply, increase affordability and deliver homes that suit different stages of life:
- Increasing eligibility for stamp duty concessions for all eligible purchasers' price threshold above $1 million.
- 85 new public housing dwellings delivered through Community Housing Providers under the Housing Australia Future Fund Facility (HAFFF).
- $20 million additional funding for the Affordable Housing Project Fund, increasing the total to $100 million.
- 300 affordable Build-to-Rent homes.
- 7 new social housing townhouses acquired in Coombs under the Social Housing Accelerator.
- Ongoing investment in the Growing and Renewing Public Housing Program to maintain and expand Canberra’s public housing portfolio.
By expanding stamp duty concessions to more homebuyers, the government is making it easier for Canberrans to enter the market and find a home that suits their needs.
- ACT Budget 2025-26: Investing in Tourism, Events and Iconic Destinations
Released 22/06/2025 - Joint media release - ACT Budget 25-26: 30,000 new homes to provide more housing for Canberrans
Released 23/06/2025 - Joint media release - 2025-26 ACT Budget: Delivering for Tuggeranong
Released 12/06/2025 - Joint media release - ACT Budget 2025-26: Joint funding for new Canberra Aquatic Centre and Convention & Entertainment Precinct
Released 13/06/2025 - Joint media release - ACT Budget 2025-26: Delivering for central Canberra
Released 14/06/2025 - Joint media release - ACT Budget 2025-26: Targeted Cost of Living Support for Canberrans
Released 16/06/2025 - Joint media release
FOR MORE INFORMATION
If you would like to discuss how the changes will impact you or your business, please contact our experts, Devika Shivadekar and Mira Brewster
