How the July 2025 TSMIT Increase is impacting Australian Employers and Skilled Workers

1 July 2025 saw the first annual indexation of the Temporary Skilled Migration Income Threshold (TSMIT), which officially increased from AUD 73,150 to AUD 76,515, in line with the AWOTE indexation to average earnings. This change applies to all new nomination applications under employer-sponsored visa streams, including the Subclass 482 (Skills in Demand) and Subclass 494 and 186 programs.

While intended to align migrant worker salaries with Australian labour market standards, this rise in TSMIT is placing significant pressure on businesses, especially those in regional areas and low-margin industries, as they grapple with higher wage obligations amid broader economic challenges. At the same time, the increased threshold is narrowing migration opportunities for skilled workers, particularly in occupations that fall just short of the new salary floor.

For Australian employers sponsoring overseas workers under the Subclass 482 Core Skills stream or Subclasses 494/186 visas, the new minimum is AUD 76,515 per annum excluding superannuation.  It also excludes overtime, bonuses and commissions unless these amounts are contractually agreed in advance. Employers must now reassess budgets and financial forecasts, and consider how they manage the associated and intensifying compliance risks.

For regional business, small-to-mid enterprises and employers in sectors including aged care, retail, hospitality, margins are already thin. With inflation running at 3 to 4% nationally, and living costs, particularly housing, increasing across major cities, many businesses now face the double squeeze of paying higher mandated salaries while grappling with rising operating expenditures. The increased superannuation guarantee to 12% from July 2025 further compounds costs.

After amendments made last year by the Department of Home Affairs, this salary threshold will increase year on year, so over time, it is likely that this indexation will see some reduction in skilled employer sponsored migration in critical industries that cannot fill their labour market needs locally.  The Department does offer Labour Agreements where an employer can seek agreement to a reduction in the salary threshold that applies, however these can be costly and take many months to be approved.

This income threshold rise has and will continue to have significant knock‑on effects for skilled workers seeking to migrate under employer‑sponsored streams:

• Opportunities in lower‑paid occupations, especially in sectors like hospitality and regional roles, are becoming scarcer for overseas applicants. While these sectors may not be able to keep up with the annual indexation of wages, they do have a continued need to access offshore skilled workers to supplement their local workforce.
• In contrast, high‑earning Specialist Skills stream applicants now face an even higher bar, after the Specialist Skills Income Threshold was also increased on 1 July 2025 from AUD 135,000 to AUD 141,210.

For applicants, this means fewer viable sponsorships and for employers, less flexibility in offering salaries for core occupations. The effect will likely concentrate skilled migration into fewer, high‑wage roles, reducing migration flows in mid‑level professions.   Restriction of access to the skilled migration program for essential roles in sectors including hospitality, aged care, and for trades will have a demonstrable and devastating impact for employers already struggling to find the workers they need.

At Mapien, we counsel corporate clients facing the TSMIT hike in several keyways:

• Benchmark remuneration packages to ensure they satisfy both the TSMIT and the AMSR for each specific occupation, particularly when market salary surveys exceed the standard threshold.
• Re‑target occupations: if a role cannot exceed the threshold, employers may pivot to Subclass 186 or other pathways only applicable to higher‑paid positions or explore other visa subclasses where threshold rules differ.
• Manage workforce planning, by segmenting roles into those suited to sponsorship and those that may become restricted to local hiring only due to salary limitations.

Annual indexation of the visa salary thresholds is part of a broader push to align skilled migration with domestic wage growth and discourage under‑cutting of Australian workers and wages. These reforms, including the annual indexation mechanism tied to Average Weekly Ordinary Time Earnings (AWOTE), reinforce fair pay standards.

Meanwhile, Australia’s broader migration program is under pressure: net migration targets are being scaled back (from over 500,000 to 260,000 permanent places in 2024‑25), with fewer total skilled intakes and heightened scrutiny on applications. Against this backdrop, businesses must be more selective about when and how to sponsor overseas talent.  Unfortunately for some sectors however, ongoing labour shortages continue to drive demand for overseas talent, with some employer being unable to ‘opt out’ of the sponsorship programs.

The TSMIT increase to AUD 76,515, now in effect since 1 July 2025, marks a pivotal shift in Australia’s employer-sponsored skilled migration landscape. Businesses, particularly small-to-medium enterprises and regional employers are already feeling the impact of heightened compliance obligations at a time of broader economic uncertainty. For skilled migrants, the higher salary threshold is limiting access to opportunities in occupations that once qualified under the previous income floor.

At Mapien, we continue to support our corporate clients in navigating these challenges, whether by reassessing remuneration structures, reviewing sponsorship strategies, or ensuring compliance with both the new threshold and market salary expectations. Considering these changes, we encourage employers to proactively review their skilled migration programs to safeguard ongoing access to global talent and minimise disruption to workforce planning.  This will become increasingly important when preparing budgets ahead of each 1 July, in anticipation of the increased salary thresholds that will continue to take effect.

If you have questions about the TSMIT increase or require immigration support, please contact us below and one of Migration Agents will be in touch within 24 hours.