In brief
The 2025-26 New South Wales (NSW) Budget (the Budget) was delivered on 24 June 2025 by Treasurer Daniel Mookhey. The Treasurer describes the Budget as a continuation of the budgets delivered in September 2023 and June 2024 in ‘building a better New South Wales’, through restoring essential services, rebalancing public finances, and laying the foundation for long-term growth.
In detail
The NSW Government anticipates total revenue in 2025-26 will be $124.15bn, and this is expected to grow to $137.1bn by 2028-29. Of this, receipts from taxation are forecast to be $51.3bn in 2024-25 and $59.5bn by 2028-29.
The forward estimates of revenue are higher than previously forecasted due to increased Commonwealth funding (i.e., through GST and National and Federation Funding Agreement payments) and higher than expected stamp duty receipts on the back of ‘an improved outlook for residential property prices in response to further easing of monetary policy. Note however that this is partially offset by’ downgrades to payroll tax revenue due to a weaker outlook for both employment and wages growth.
Total general government sector expenditure is expected to be $127.6bn in 2025-26 and $136.1bn in 2028-29. Accordingly, the NSW Government has projected a budget deficit of $3.4bn for 2025-26 (down from a $5.7bn deficit in 2024-25) and a return to surplus from 2027-28.
As of June 2024, the net debt as a proportion against Gross State Product (GSP) was 11.4%. This ratio is effectively a measure of the State’s debt compared with the size of the economy and provides an indication of the State’s ability to service its debt. The Budget projects net debt to be $120.3bn at June 2026 (13.7% against GSP) and $133.8bn by June 2029 (13.1% against GSP).
Against this backdrop, the fiscal measures in the Budget have accordingly been described by the Treasurer as a ‘responsible path back to a moderate surplus’ — forecasted $1.1bn surplus by 2027-28) — with a fiscal strategy of returning to a sustainable operating position and stabilising and then maintaining NSW’s debt position.
At a broad level, the Budget focusses on measures to address:
- Housing - through the introduction of the ‘Pre-sale Finance Guarantee’ scheme (estimated to bring forward the construction of up to 15,000 extra market homes over the next five years), indefinite extensions to build-to-rent land tax discounts (for which were originally set to expire by 2039), introduction of a ‘works in kind’ contributions regime, an extra $1.2bn investment in TAFE over the next four years to train plumbers, electricians, carpenters, construction workers.
- Child protection - an extra $1.2bn investment into child protection services and pay rises for case workers, increases to the foster care allowance, increases in funding for the Victim Support Scheme and domestic, family and sexual violence assistance services.
- Cost-of-living - continuation of payroll tax exemptions for doctors in metropolitan Sydney bulk-billing 80% of patients/doctors in regional NSW bulk-billing 70% of patients.
- Essential services - $12.4bn spend on health infrastructure, including a new hospital at Rouse Hill, rebuild of Bankstown Hospital, and establishment of a new pathology hub at Westmead, investments in public transport, investments in renewable energy and investments in the Western Sydney Aerotropolis, roads, emergency services and First Nations Closing the Gap initiatives.
- Driving economic growth - the creation of an Investment Delivery Authority to fast-track planning for non-residential developments.
- Education - continuation of investment into public schools and school infrastructure ($9bn over the next four years), introduction of the Innovation Blueprint to back emerging technologies, commercialisation, advanced manufacturing and ensure young entrepreneurs can connect with the incubators, accelerators and capital they need to scale.
- Fixing the State’s finances - extension to the Revenue NSW tax integrity program aimed at increasing level of tax compliance, managing debt and saving on associated interest payments.
The key measures are set out in further detail below.
Tax measures announced in the Budget Papers
Build-to-rent (BTR) land tax concessions
The 50% reduction in assessed land value for BTR developments will be made permanent for owners of new BTR developments from the 2026 land tax year onwards i.e., these developments will not be subject to the original concessional expiry date of December 2039. BTR exemptions from foreign purchaser duty can also apply indefinitely provided ongoing eligibility requirements continue to be satisfied.
The NSW Government has also announced that the requirement for a proportion of labour force hours for construction be performed by specified classes of workers will also be removed, and this is expected to broaden the availability of the concessions to BTR developers.
BTR developments that are already receiving, or have applied for, the concession for the 2025 or prior land tax years are ineligible to receive the extended concessions announced.
Compliance activity
Funding has been allocated in the Budget for the following compliance activity:
- Extension of Revenue NSW tax integrity program as initially announced in the 24-25 Budget. Funding is intended to support increased tax compliance.
- Continued funding ($4m) for increased compliance activities on gambling operators i.e., for point of consumption tax and gaming machine tax.
Mineral royalties
As previously announced in October 2024 as part of its Critical Minerals and High-Tech Metals Strategy, the NSW Government will implement a deferred royalty scheme for new critical minerals projects with the aim of enabling investment in regional areas and supporting the development of an industry segment crucial to energy transition.
Other Budget initiatives
Elsewhere in the Budget, the following investment initiatives (among others) were announced:
Housing
The Budget includes measures to improve access to quality housing and reduce pressure on housing affordability, seeking to build on the NSW Government’s implementation of the Transport Orientated Development program, Low and Mid-Rise Housing Policy and the Building Homes for NSW Program, announced in the 2024-25 Budget. The measures set out in the Budget include:
- the introduction of the Pre-Sale Finance Guarantee, under which the Government will guarantee pre-sales for up to $1bn of approved housing projects on a rolling basis, allowing developers to secure finance earlier and commence construction more quickly;
- indefinite extensions for owners of BTR developments of land tax discounts (noted above);
- introduction of a works in kind contributions regime i.e., offsets on housing and productivity contributions for eligible developers who build approved infrastructure to enable housing (draft guidelines setting out how the Department of Planning, Housing and Infrastructure are to assess and prioritise proposals are available here);
- $145.1m investment in the four years to 2028-29 to support the ongoing work of the Building Commission NSW to reform the building and construction industry; and
- an additional $83.4m investment in additional planning resources (including for the Housing Delivery Authority, which commenced operations in January 2025 and has since progressed 136 projects through the State Significant Development pathway).
Cost of living relief
- The Budget provides (and restates existing measures) to assist households with the impacts of cost-of-living pressures, including:
- continuation of stamp duty concessions for first home buyers;
- energy bill relief or rebates, including:
- $579m increase in recurrent expenses in 2025-26 (fully funded by the Australian Government) to extend the National Energy Bill Relief Fund providing all households and eligible small businesses with electricity bill rebates of $150;
- continuation of other State-funded energy rebate programs in 2025-26 for eligible households including:
- $225m Low Income Household Rebate;
- $31m Gas Rebate;
- $25m Energy Accounts Payment Assistance;
- $14m Life Support Rebate;
- $11m Seniors Energy Rebate; and
- $8m Family Energy Rebate for FTB recipients;
- new pay agreements for public sector workers i.e., through a continuation of industrial relations reforms which began in 2023 — abolishing the wages cap, introducing the Fair Pay and Bargaining Policy, increasing pay to some essential workers and reaching multi-year agreements for the public sector workforce;
- fee relief for preschool programs, including:
- a maximum $4,347 fee relief for parents and carers of 3 to 5-year-olds in community and mobile preschools;
- fee relief between $515 and $2,174 to parents and carers of children aged 3 to 5 years attending eligible preschool programs in long day care centres;
- toll relief, including:
- $58.0m investment to further support the Toll Reform Program and in establishing and managing the NSW Motorways Entity;
- continuation of the $60 toll cap scheme to enable eligible private motorists to claim up to $340 rebate per week in each quarter through to 31 December 2025;
- funding of the M5 South-West Cashback Scheme in providing tolls rebate for residents using a NSW registered vehicle for private, pensioner or charitable purposes on the M5 South-West Motorway;
- $9.8m investment over five years allocated to the Independent Pricing and Regulatory Tribunal to support its ongoing role in the private monitoring of tolls; and
- $9.4m investment to continue advancing the government’s negotiations with private toll operators to obtain more favourable terms for drivers.
Education
- The Budget relevantly provides for the following educational objectives:
- $9bn towards upgrading school infrastructure over four years (expected to add 140 classrooms to accommodate 2,500 students), including the opening of new schools in Emerald Hills, Wilton, Grantham Farm, West Dapto, and upgraded schools at Newington, Excelsior, Thornton, Rydalmere, Rydalmere East, Ermington West, Asquith, Bayside and Northern Beaches Secondary College;
- an additional $5.6bn investment in NSW public schools over the next 10 years to 2034-35, alongside a $4.8bn commitment from the Australian Government as part of the Better and Fairer Schools Agreement which commenced in January 2025;
- $1.2bn investment over the next four years into the TAFE system to accelerate the training of thousands of new trades and construction workers to address skills shortages, including through expanded fee free apprenticeships and traineeships;
- $324.7m investment over the four years to 2028-29 to providing greater job security and converting TAFE NSW teachers and staff to permanent roles;
- a further $2.8bn investment in 2025-26 for TAFE to grow the skilled workforce;
- $200.9m investment to increase First Nations access, enrolment and attendance in early childhood education;
- $280.6m investment over the four years to 2028-29 in continuing Screen NSW’s Made in NSW and Post, Digital and Visual Effects rebate programs; and
- continued delivery on its commitment for 100 new public preschools at 100 sites across NSW.
Transport and infrastructure
- The NSW Government has announced the establishment of a new Investment Delivery Authority to fast-track proposals valued over $1.0bn through the NSW planning system and advise the Government on options for non-planning support to remove barriers to commencing major non-residential projects. It is expected to help about 30 large projects per year, bringing forward up to $50bn of investment each year.
- The Budget provides for $118.3bn in capital expenditures over the next four years to 2028-29 (c.f. $119.4bn in last year’s Budget to 2027-28) as part of its ongoing Essential Infrastructure Plan with investments prioritised in transport projects, schools, hospitals, housing and critical utility services. This includes $55.6bn for transport infrastructure, including:
- $10.8bn over four years for Sydney Metro West
- $3.8bn over four years for Western Sydney Harbour Tunnel Upgrade
- $3.6bn over four years for Sydney Metro-Western Sydney Airport
- $2.1bn over four years for Zero Emissions Buses Program
- $1.2bn over four years for Road Safety Investment
- $844.3m over four years for New Buses to Cater for NSW Services
- $843.1m over four years for Regional Rail Fleet
- $801.4m over four years for Sydney Metro City and Southwest
- $741.7m over four years for Pacific Highway Corridor - M1 to Raymond Terrace and Hexham Straight Widening
- $680.5m over four years for Princes Highway Corridor Upgrade.
Health
- The NSW Government will invest $12.4bn as part of the Essential Infrastructure Plan to build and upgrade health infrastructure over the next four years, with $3.3bn in 2025-25, including:
- $700.0m in additional funding for the New Bankstown Hospital;
- $492.0m to develop a Statewide Pathology Hub on the Westmead campus;
- $669.8m to continue delivering infrastructure required to progress key mental health reforms for improved mental health care; and
- $90.0m in additional funding for the new Rouse Hill Hospital to provide the full range of maternity and birthing services.
- Additionally, the NSW Government will invest $836.4m through the Essential Health Services package to support core health services across the State and to reduce overdue surgeries.
Energy and environment
- $2.1bn continued investment over the next four years in the Transmission Acceleration Facility, to support the five renewable energy zone projects; and at Central-West Orana, New England, Hunter-Central Coast, Illawarra, and South West. This builds on the $1.1bn invested to date on these critical projects;
- $472.9m investment for long-lasting biodiversity protections and environmental management i.e., through the Biodiversity Offset Scheme, improved visitor infrastructure and nature protection in national parks, and improved biodiversity conservation and environmental water management.
Disaster relief
- In the backdrop of worsening (and unprecedented) natural disasters since the fires of 2019, the NSW Government and Australian Government has spent $9.5bn on disaster relief and recover across the State. The NSW Government expects this trend to worsen, forecasting the cost of natural disasters to reach $24bn each year by 2070-71 due to climate change. Accordingly, the Budget has provided a further $4.2bn in disaster relief across the forward estimates.
Communities and justice
- $731.8m to improve outcomes for First Nations people, including $202.4m of new funding to deliver 14 initiatives that have been co-designed with NSW Coalition of Aboriginal Peak Organisations and the NSW CTG Joint Council;
- A $1.2bn child protection package to begin the process of rebuilding the out-of-home-care sector and improving outcomes for the State’s most vulnerable children;
- A further investment of over $650m to support victim-survivors e.g., through additional funding for domestic, family and sexual violence services, investments in the Victims Support Scheme and additional funding for the Office of the Director of Public Prosecutions (to keep pace with the growing volume and complexity of cases).
The takeaway
The 2025-26 NSW Budget builds on the previous Minns-government budgets, focusing on housing supply, housing affordability, child protection, essential services and addressing the cost of living. Changes to the existing build-to-rent land tax concessions are a welcome key tax measure.
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