Dependents and Your Finances in 2025: Key Updates for Australians

With rising living costs and evolving government policies, the financial implications of having dependents in Australia have never been more significant. Whether you’re raising children, supporting elderly parents, or caring for someone with a disability, understanding how dependents affect your finances in 2025 is crucial for smart money management.

Who Qualifies as a Dependent in 2025?

The Australian Taxation Office (ATO) defines a dependent as a person who relies on you for financial support. This typically includes:

• Children under 21 (not engaged in full-time work)

• Full-time students under 25

• Spouses or de facto partners

• Carers for those with disabilities

• Sometimes, elderly parents living with you

In 2025, the ATO’s criteria remain largely unchanged, but there’s increased scrutiny on evidence of support, especially for adult children and extended family members. Documenting financial assistance and cohabitation is more important than ever for eligibility.

Tax Impacts and Family Benefits in 2025

Claiming dependents continues to unlock several tax offsets and government benefits, but there are important updates for the 2024-2025 financial year:

• Family Tax Benefit (FTB): Both Part A and Part B thresholds have been indexed for inflation, with Part A now phasing out at $105,000 of combined income (up from $101,000 in 2024).

• Child Care Subsidy: The maximum subsidy rate increased to 92% for families earning less than $75,000. The tapering now continues up to $362,000, reflecting higher cost-of-living adjustments.

• Tax Offsets: The Dependent (Invalid and Carer) Tax Offset remains, but eligibility checks are stricter. There’s renewed focus on proof of financial maintenance and co-residence.

• Medicare Levy Reduction: If you support dependents and your income is below $39,000, you may qualify for a full or partial Medicare levy reduction.

Example: If you’re a single parent with two children in full-time study and an income of $80,000, your Family Tax Benefit and Child Care Subsidy entitlements will have increased slightly for 2025, but you’ll need to provide detailed records of school attendance and expenses.

Financial Planning with Dependents: What to Consider

Having dependents isn’t just about tax time – it shapes your financial strategy year-round. Here’s what to keep top-of-mind in 2025:

• Budgeting: Account for rising education, health, and childcare costs. The government’s 2025 Cost of Living Relief Package has provided some energy bill relief, but food and rent remain high.

• Insurance: Review your life and income protection insurance. Many policies offer additional cover for dependents, and some super funds have introduced dependent-linked benefits for 2025.

• Estate Planning: Update your will and superannuation nominations to reflect new or changing dependents, especially as blended families and multi-generational households become more common.

• Centrelink and Services Australia: Always update your details promptly if your dependent status changes, as overpayments can lead to future debts.

Case Study: The Tran family in Melbourne added a live-in grandparent as a dependent in 2025. Their eligibility for additional Carer Allowance and a partial Medicare levy reduction was confirmed after providing medical and cohabitation documents, boosting their annual household budget by nearly $4,000.

Recent Policy Trends and the Road Ahead

2025 is a year of transition for Australian families. The government’s review of family benefits is ongoing, with a focus on simplifying the system and better supporting non-traditional family structures. Watch for potential mid-year changes to means testing and support for adult dependents with disabilities.

Digital integration is also increasing: most benefits and tax claims now require MyGov-linked verification, and Services Australia is piloting real-time data sharing between agencies to cut down on paperwork.