Federal Budget 2025: What small businesses need to know

The Australian government has delivered a rare fourth budget, aimed at easing cost-of-living pressures. Federal Treasurer Jim Chalmers told Parliament the economy is "turning the corner" with increasing economic momentum.

Cost-of-living

For small businesses, Luke Yeaman, Chief Economist, CommBank says there is some good news in Tuesday’s announcements. “When you look at the updated economic forecasts, there is an expectation that the economy will continue to firm, grow and strengthen over the near-term,” he says.

On the activity side of the economy, the government has forecast real GDP growth of 1.5% in 2024/25, strengthening to 2.25% in 2025-26, aligning with CommBank’s Global Economic & Markets Research forecast (2.3%)¹. “With growth picking up and consumers becoming a little more confident, that should give more opportunities for small businesses to grow and expand their markets,” Yeaman says.

The government surprised all Australian taxpayers with its centrepiece tax cut announcement,designed to ease the cost-of-living pinch by reducing the first marginal tax rate from 16% to 14% over two years from 1 July 2026, at a cost of $17.1bn over five years².

Rebecca Warren, Executive General Manager Small Business, CommBank, notes small businesses have done it tough in recent years, highlighting persistent pressures like rising interest rates, difficult trading conditions, and challenges around low unemployment making it hard to recruit and retain staff.

"Small businesses, which account for 97%³ of all businesses in Australia, are consistently and relentlessly trying to improve how they operate," she says. “As cost-of-living pressures ease, hopefully that will release discretionary spending in the small business economy.”

Power bills

Yeaman notes there wasn't a heavy focus on small businesses in federal budget measures, but there was one measure which will provide some direct support for small business operating costs: energy bill rebates.

“The government has chosen to extend the existing energy bill rebates that it put in place over the recent years, for a further six months,” Yeaman says. “It’s a small measure but it provides an additional $150 to a small business, probably benefiting around 1 million small businesses in the economy, and providing that little bit of extra support going forward.”

Support measures

The budget does contain targeted initiatives aimed at small business relief. However, CommBank’s Global Economics & Markets Research team, describes the support as “modest” beyond the energy rebate extension.

Measures for small business attention include:

• $56.7 million in Energy Efficiency Grants for small and medium-sized enterprises, with grants of up to $25,000 per business for appliance upgrades and efficient heating improvements.
• Pausing indexation on draught beer excise and excise-equivalent customs duties to support hospitality businesses and alcohol producers, at a cost of $165 million over five years.
• Promotion of 20-day payment terms for contractors and subcontractors working on major Commonwealth construction projects.
• Increased ASIC funding to target illegal phoenixing practices, especially within the construction industry.
• Collaboration with states and territories to expand protections against Unfair Trading Practices for small businesses.

There was notably no continuation of the $20,000 instant asset write-off, which ended despite a temporary reprieve in the previous budget.

Warren advises small businesses to closely review detailed budget announcements to understand the specific impacts on their operations. “Consider how potential cuts and changes in funding might impact your operations and prepare contingency plans,” she recommends.

The big picture

Belinda Allen, Senior Economist, CommBank, suggests that small businesses should closely monitor broader economic indicators beyond the immediate measures in the latest budget.

Importantly, the budget itself "will not be what's driving the health of the economy in the near or mid-term". Instead, she says, the key factors to watch are "how the consumer responds to interest rate cuts and global uncertainty".

CommBank offers targeted resources and support designed to assist small businesses through challenging economic conditions, including complimentary cash flow management training developed in partnership with AGSM at UNSW Business School, and cyber security training through the Cyber Wardens program, in collaboration with the Council of Small Business Organisations Australia (COSBOA) and Telstra.

To learn more, visit commbank.com.au/smallbusiness