How the 2025 Federal Budget Impacts High-Earning Retirees

The recently announced 2025 Federal Budget has introduced several measures that could impact high-income retirees in Australia. While much of the focus has been on cost-of-living relief and tax cuts for middle-income earners, there are key takeaways for retirees who have significant assets or income streams.

Let’s break down what’s changing, what it means for you, and what you should consider moving forward.

1. Superannuation adjustments – more room for tax-free retirement savings

A big win for retirees is the increase in the Transfer Balance Cap (TBC) from $1.9 million to $2 million, effective July 1, 2025.

1. This means you can move more of your superannuation savings into a tax-free pension account and potentially reduce your taxable income.

2. If your super balance is approaching this limit, now is a great time to review your strategy and ensure you’re maximizing your tax-free pension benefits.

2. Tax adjustments – a mixed bag for high-income retirees

While much of the tax relief is aimed at lower- and middle-income earners, high-earning retirees may see some indirect benefits.

The Stage 3 tax cuts are still in place but have been slightly modified. From July 1, 2025:

• The 37% tax bracket remains for incomes between $135,000 and $190,000 (previously set to be scrapped).

• The 45% tax rate will kick in at $190,000 instead of $200,000.

Key Takeaway: If you draw an income from investments, super, or a business, these changes could slightly increase your tax liability compared to the original Stage 3 plan. Strategic tax planning is now more important than ever.

3. Deeming rates freeze – a silver lining for some retirees

The government is freezing deeming rates for another year, meaning:

1. Retirees receiving Age Pension payments won’t be negatively impacted by fluctuations in investment returns.

2. For self-funded retirees, the freeze won’t provide direct benefits, but it does prevent deemed income from rising artificially, which could affect eligibility for certain government benefits.

If you straddle the line between full self-funding and part-pension eligibility, this could be an opportunity to review your assets and income streams.

4. Healthcare & cost of living – limited direct benefits for high earners

While there are additional energy rebates, expanded bulk-billing, and cheaper PBS medications, these initiatives primarily benefit retirees who rely on government support.

However, the increasing cost of private health insurance and aged care remains a key concern for high-income retirees. If you’re considering:

• Aged care planning

• Health insurance adjustments

• Estate planning to minimize future costs

…now is a great time to discuss strategies that align with your financial goals.

What’s next?

The 2025 Budget reinforces the need for strategic planning—especially for high-income retirees. Whether it's maximising your super tax benefits, structuring your retirement income efficiently, or preparing for future tax implications, now is the time to take action.

Want to ensure your retirement strategy is optimised for the new budget changes? Let’s talk! Contact Investwisely, your local Hills District experience financial advisors for a tailored financial review.

Call 02 9634 6698 or book a free consultation with our expert financial advisors at our office in Sydney's Norwest.

Investwisely ABN 34 619 736 248, is a Corporate Authorised Representative 246638 of InterPrac Financial Planning Pty Ltd AFSL 246638.