2025-26 Federal Budget wrap for motorists

With a federal election on the horizon, the Australian Government’s focus for this financial year’s Federal Budget has centred around income tax cuts.

As far as motoring and transport in general, the government didn’t announce any major incentives or schemes. Rather, it detailed spending on a slew of new road and rail projects.

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The federal government says it will spend $15.6 billion over 10 years on new transport projects, including:

In the rail realm, there’s $2.0 billion for upgrading Sunshine Station (VIC), and $1.0 billion to preserve the South West Sydney Rail Extension corridor (NSW).

For existing projects, the government has allocated $1.5 billion over eight years, including $1.1 billion for the Western Freeway (VIC), $200 million for the Rockhampton Ring Road (QLD), $50 million for Homebush Bay Drive (NSW), and $30 million for the first stage of the Monaro Highway upgrade (ACT).

Luxury Car Tax and other duties

There are no changes to the Luxury Car Tax, or to duties levied on petrol and diesel.

The government estimates it will collect $1.2 billion from the LCT during the 2025-26 financial year, a slight increase from the $1.17 billion it expects to gain from the tax during the current financial year.

A further $380 million of income is expected from car import duties.

The petrol excise should generate around $7.45 billion in the coming financial year, while the diesel excise will add $17.85 billion to the federal coffers.

These numbers all pale in comparison to the amount of money the government collects from income tax ($350 billion), company tax ($140 billion), and the GST ($94 billion).