The ATO will apply a 20% reduction to your study and training support loan, such as HELP and SSL, on 1 June 2025, before indexation. The ATO will also adjust the indexation for 2025 so it applies to the lower loan debt amount. Loan holders will be notified when the ATO has applied the reduction to their loan account.

You may get a refund if the 20% reduction puts your study loan account in credit and you don’t have any outstanding tax or other Commonwealth debts. The ATO expects most reductions will be applied before the end of the calendar year. You do not need to do anything to get the reduction and you can lodge your tax normal as you normally would do.

Compulsory repayment changes

The minimum repayment threshold has increased to $67,000 for 2025–26 (up from $54,435 in 2024–25). Compulsory repayments are now calculated using marginal rates. This means you only make repayments on repayment income above $67,000. These thresholds and amounts are indexed each year.

The ATO is working with Digital services providers on these changes so they can update their systems and advise employers in preparation for delivery. The ATO will update the PAYG withholding schedules later this year to reflect the changes to calculating compulsory repayments.

Compulsory repayments will be smaller for most people, and fewer people will need to make one. Employees may have less tax withheld from their pay for compulsory repayment after changes are made.

If you pay PAYG instalments, the ATO won’t change these rates and amounts until the 2026–27 income year.

Please contact us for advice about varying your 2025–26 instalments. The ATO is reminding us that it is important that client variations are within 85% of their total tax payable. Underestimating instalment amounts or rates could lead to a tax bill at the end of the year.