Tax Free in Australia 2025: What’s New and What Can You Claim?

Tax Free in Australia: What Can You Really Claim in 2025?

Every Australian dreams of paying less tax, but ‘tax free’ isn’t always as simple as it sounds. With a raft of new financial policies rolling out in 2025, it’s crucial to understand what you can (and can’t) claim as tax free, whether you’re a worker, investor, or business owner. Let’s unpack the current landscape and spotlight the tax-free perks you might be missing out on this year.

The Tax-Free Threshold: Still Australia’s Best-Known Perk

For most Australians, the tax-free threshold is the first stop. As of July 2025, the threshold remains at $18,200, meaning you won’t pay any income tax on the first $18,200 you earn each financial year. This continues to be a fundamental benefit for low-income earners and casual workers.

• Who gets it? Australian residents for tax purposes – including permanent residents, citizens, and many visa holders.

• What’s new? There was speculation around raising the threshold as part of broader cost-of-living relief, but the 2025 Federal Budget kept it unchanged.

• Tip: If you have more than one job, only claim the threshold from your main employer to avoid unexpected tax bills at EOFY.

Superannuation: Tax-Free Withdrawals & 2025 Updates

Super withdrawals are a key area where tax-free benefits can make a real difference. For Australians aged 60 and over, withdrawals from a taxed super fund remain tax free in 2025. However, recent policy tweaks are targeting high-balance accounts and concessional contributions:

• Super balances over $3 million: From 1 July 2025, earnings on balances above $3 million will be taxed at 30% (up from 15%). The portion below $3 million is unaffected.

• Downsizer contributions: Still tax free for those over 55, letting you contribute up to $300,000 per person from the sale of your family home without penalty.

• Early withdrawals: Only tax free in limited circumstances (such as severe financial hardship or specific government schemes).

Example: If you’re 62 and retire with $850,000 in super, your pension payments and lump sums are tax free. But if you have $3.5 million, the earnings on the extra $500,000 will attract a higher tax rate.

Digital Nomads & Remote Workers: New Tax-Free Allowances

The rise of remote work and digital nomadism is changing the tax landscape. In 2025, the ATO clarified its stance on work-from-home allowances and tax-free benefits for digital professionals:

• Work-from-home expenses: The fixed rate method for claiming running expenses remains at 67c per hour, covering electricity, internet, and phone. Equipment purchases under $300 can be claimed outright, potentially reducing taxable income but not strictly ‘tax free.’

• Overseas income: If you’re an Australian resident working overseas, your income is generally taxable in Australia, but some double-tax agreements and specific exemptions can apply.

• Per diems and travel allowances: Genuine work-related travel allowances (within reason) can be tax free if substantiated.

Case Study: Sarah, a Melbourne-based graphic designer, works remotely for a US company. She claims the fixed rate for her home office, and her per diems for a short work trip to Sydney are tax free—so long as she keeps detailed records.

Other Common Tax-Free Areas in 2025

• Gifts & windfalls: Most gifts and lottery winnings remain tax free in Australia, but interest earned on those amounts (if invested) is not.

• Scholarships: Many education scholarships are tax free if you’re a full-time student and the award isn’t for work performed.

• Government payments: Some Centrelink payments (like the Disability Support Pension for under-21s) are tax free, while others are taxable.

What’s Not Tax Free: Key Traps to Avoid

• Cryptocurrency gains: Any profits from selling crypto assets are subject to capital gains tax (CGT).

• Rental income: All rental earnings must be declared, though you can offset expenses.

• Side hustles: Earnings from gig economy work (Uber, Airtasker, etc.) are taxable.

Conclusion: Maximise Your Tax-Free Opportunities in 2025

With a careful understanding of the latest tax-free rules, every Australian can make smarter choices—whether that’s claiming the full threshold, optimising super withdrawals, or making the most of remote work benefits. Don’t leave money on the table: stay informed and proactive to keep more of what you earn.