The Australian Government has just announced the 2025 Federal Budget, introducing significant reforms that will directly affect hair salon owners, employees, and industry professionals. Here’s what you need to know and how the 2025 Federal Budget impacts Australian hair salons.
1. Tax Cuts for Employees
From 1 July 2026, all Australians earning over $18,200 will receive a tax cut, with the biggest savings going to low and middle-income earners. Many hairdressers and barbers fall into this bracket, which means more take-home pay for staff and potentially increased spending on personal care services.
Estimated tax savings by income level:
- $40,000 – approx. $654/year
- $60,000 – approx. $1,179/year
- $80,000 – approx. $1,679/year
- $100,000 – approx. $2,179/year
- $200,000+ – approx. $4,529/year
What this means for salon owners:
- Higher take-home pay may boost employee satisfaction and retention.
- Clients may have more disposable income, potentially increasing demand for hairdressing services.
- Be prepared for potential staff requests for salary reviews as awareness of tax cuts grows.
2. Non-Compete Clause Ban
The Government plans to ban non-compete clauses for employees earning under $175,000 per year. In the hairdressing and barbering industry, non-compete clauses have traditionally helped protect client relationships, specialised techniques, and business reputations.
What this means for salon owners:
- Employees will have more freedom to move between jobs or start their own businesses.
- Salon owners will need to focus on employee retention through leadership, culture, profit-sharing, and skill development.
- Contracts should be updated with enforceable protections, such as confidentiality, non-solicitation, and training repayment clauses.
3. Instant Asset Write-Off Changes
The instant asset write-off threshold will decrease from $20,000 to $1,000 from 1 July 2025. Salon owners looking to invest in new equipment, such as chairs, basins, or hairdryers, should consider making purchases before this change takes effect to maximise tax benefits.
4. Small Business Energy Bill Relief
A $150 energy bill rebate will be available to approximately 1 million eligible small businesses, including hair salons. This rebate will be automatically applied in two $75 installments starting 1 July 2025, helping to offset rising operational costs.
5. Energy Efficiency Grants
The Government has allocated $56.7 million for Energy Efficiency Grants, offering up to $25,000 per business to upgrade appliances and improve heating systems. Salons can use this funding to improve energy efficiency and reduce long-term costs.
In Summary
The 2025 Federal Budget introduces:
- Tax cuts that benefit salon employees and may boost customer spending.
- A ban on non-compete clauses, requiring new strategies for staff retention and contract structuring.
- A lower instant asset write-off threshold, meaning now is the time to invest in salon upgrades.
- Energy relief measures, including electricity bill rebates and efficiency grants to help manage operational costs.
With these changes on the horizon, it’s essential for salon owners to review their financial and employment strategies. The Australian Hairdressing Council (AHC) will continue to support members by providing updates, resources, and expert guidance on how to navigate these reforms successfully.
If you are not a member of the AHC but are interested to learn how we can support you and your business, please visit our website to learn more: https://theahc.org.au/ or you can book a call with one of our friendly team HERE.
