The 2026 Federal Budget: The Top 10 Takeaways
10 Federal Budget Changes That Could Impact Your Finances
The 2026-27 Federal Budget has introduced significant reforms affecting tax, property investment and business planning. From major changes to negative gearing and capital gains tax to new tax offsets and deductions, here is the plain-English breakdown of what you need to know.
But first, here is everything the Budget touched on. Click a category to explore.
- RBA cash rate increased to 4.35% in May 2026 (third rise since January 2026)
- Middle East conflict driving record petrol and diesel price increases
- Economic growth forecast at 1.75% for 2026-27, inflation expected at 2.50%
- Unemployment rate forecast at 4.50% across 2026-27 and 2027-28
- Underlying cash deficit of $31.5 billion forecast for 2026-27
- Net debt projected to reach $767.8 billion by 2029-30
- National Competition Policy reforms to reduce barriers and costs across Australia
- National AI Plan released, comprehensive roadmap for an AI-enabled economy
- Investor Front Door pilot projects launched to fast-track major projects
- Personal tax cuts, 16% rate reduced to 15% from July 2026, then 14% from July 2027
- $250 Working Australians Tax Offset (2027-28 income year)
- $1,000 standard deduction for work-related expenses (2026-27 income year)
- Medicare levy low-income thresholds increased in line with CPI
- HELP debt, one-off 20% reduction; minimum repayment threshold raised to $67,000
- Deductions denied for ATO GIC and SIC interest charges (from 1 July 2025)
- ATO refund retention notification period extended from 14 to 30 days
- Age-based uplift removed from Private Health Insurance Rebate (from 1 April 2027)
- Medicare Urgent Care Clinics made permanent and free
- Additional drugs added to the PBS
- NDIS restored to original intent for permanent and significant disability
- Cheaper Home Batteries program to help households cut power bills
- Solar Share Offer, at least 3 hours of free daytime electricity for smart meter households
- 100,000 Homes for First Home Buyers program
- 5% Deposit Scheme, no income caps, no waitlist, no LMI (from 1 October 2025)
- Women's Budget Statement released
- Instant asset write-off permanently set at $20,000 (from 1 July 2026)
- Monthly PAYG instalments opt-in for small and medium businesses (from 1 July 2027)
- Loss carry-back reintroduced for companies under $1 billion turnover (from 1 July 2026)
- Loss refundability for small start-up companies under $10 million (from 1 July 2028)
- R&D Tax Incentive overhauled, higher offsets (up 25-50%), lower intensity threshold (1.5%), $50m refundable threshold, $200m expenditure cap (2028-29)
- R&D, tobacco and gambling activities to be excluded (bill before Parliament)
- Venture capital tax incentives expanded, higher caps for VCLP ($480m) and ESVCLP ($80m/$420m/$270m) (from 1 July 2027)
- Small Business Debt Helpline and NewAccess mental health program — extended funding
- Australian business register improvements, director ID linking, ABN authentication upgrades
- Modernising trust TFN reporting requirements (bill before Parliament)
- Tax Practitioners Board, new expanded regulatory sanction powers proposed
- Luxury car tax, updated fuel-efficient car definition and indexation
- Wine equalisation tax producer rebate increased from $350,000 to $400,000 (from 1 July 2026)
- Forestry Growth Fund established for industry modernisation
- Phase 2 of Counter Fraud Strategy, funding to modernise fraud prevention and detection
- Negative gearing limited to new builds only (from 1 July 2027), existing properties grandfathered
- 50% CGT discount replaced by cost base indexation with 30% minimum tax (from 1 July 2027)
- 30% minimum tax on discretionary trust taxable income (from 1 July 2028)
- Foreign Resident CGT regime strengthened, broader asset types, 365-day principal asset test, pre-disposal notification
- Temporary 50% CGT discount for foreign residents on renewable energy assets (until 30 June 2030)
- Ban on foreign purchases of established dwellings extended (until 30 June 2029)
- National gun buyback scheme, compensation treated as non-assessable non-exempt income
- Payday Super, employers must pay super at same time as wages (from 1 July 2026)
- Super choice of fund reforms and ban on certain super advertising during onboarding (from 1 July 2026)
- Better Targeted Superannuation Concession (Div 296), 15% below $3m, 30% between $3-10m, 40% above $10m
- Low Income Superannuation Tax Offset (LISTO), threshold raised to $45,000, maximum increased to $810 (from 2027-28)
- Super access for survivors of child sexual abuse (bill before Parliament)
- Strengthened governance for managed investment schemes within super system
- Temporary halving of fuel excise and elimination of heavy vehicle road user charge (3 months from 1 April 2026)
- Australian Fuel Security and Resilience package, more than $10 billion committed
- Strategic Reserve created for fuel security, fertiliser supply and critical minerals
- $5 billion Net Zero Fund within the National Reconstruction Fund
- $1.1 billion Cleaner Fuels Program for renewable diesel and sustainable aviation fuel
- Critical Minerals Strategic Reserve to secure and stockpile rare earths
- EV FBT exemption transitioning to permanent 25% discount (from 1 April 2029)
- Global Anti-Base Erosion Rules (Pillar Two) implemented (from 1 January 2026)
- Double tax agreements signed with Ukraine and Croatia
- Rugby World Cup 2027 (men's) and 2029 (women's), income tax and withholding tax exemptions
- DGR $2 threshold for gift deductions to be removed (bill before Parliament)
- Philanthropy reform, increased minimum distribution rates and 3-year smoothing for ancillary funds
- Specific DGR listings and removal of ministerial declaration requirement (until 30 June 2031)
That's a lot. Here are the top 10 we think you need to focus on right now.
1. Negative Gearing Limited to New Builds
From 1 July 2027, negative gearing will only be available for new residential properties. Losses from established properties can only be deducted against rental income or capital gains from residential properties.
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The Update: Properties purchased before 7:30pm (AEST) on 12 May 2026 are fully grandfathered, meaning current investors can continue to negatively gear their existing properties until they sell them.
📖 What do these words mean?
- Negative Gearing: When the costs of owning an investment (like interest on a loan) exceed the income it produces, creating a tax-deductible loss.
- Grandfathered: When existing arrangements are allowed to continue under old rules despite new legislation.
2. Capital Gains Tax Reform
The popular 50% CGT discount will be replaced with cost base indexation for assets held more than 12 months, plus a 30% minimum tax on net capital gains from 1 July 2027.
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Why it matters: Investors in new residential properties can choose between the 50% discount or the new arrangements. Existing properties will have special transitional rules based on their value at 1 July 2027.
📖 What do these words mean?
- Capital Gains Tax (CGT): Tax payable on the profit made when selling an asset that has increased in value.
- Cost Base Indexation: Adjusting the purchase price of an asset for inflation to calculate the real gain when selling.
3. New $250 Working Australians Tax Offset
A new $250 tax offset will be available for the 2027-28 income year to provide cost-of-living relief for working Australians.
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Why it matters: Tax offsets directly reduce the amount of tax you pay, potentially putting more money in your pocket at tax time.
📖 What do these words mean?
- Tax Offset: An amount that reduces the tax you pay, dollar for dollar, after your tax liability has been calculated.
4. $1,000 Instant Tax Deduction for Work Expenses
From the 2026-27 income year, Australian tax residents with labour income can claim a $1,000 standard deduction for work-related expenses without needing to keep receipts.
(Source: Unsplash)
📖 What do these words mean?
- Standard Deduction: A fixed amount that can be claimed without needing to substantiate with receipts or records.
5. Permanent $20,000 Instant Asset Write-Off
Small businesses will benefit from a permanently increased instant asset write-off threshold of $20,000 from 1 July 2026.
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Why it matters: This allows small businesses to immediately deduct the cost of assets like equipment, tools and technology, improving cash flow and reducing taxable income in the year of purchase.
📖 What do these words mean?
- Instant Asset Write-Off: A tax incentive allowing businesses to immediately deduct the cost of eligible business assets rather than depreciating them over time.
6. Monthly PAYG Reporting Option
From 1 July 2027, small and medium businesses can opt-in to report and pay PAYG instalments monthly instead of quarterly or annually.
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📖 What do these words mean?
- PAYG Instalments: Pay-As-You-Go. A system where you pay your expected tax bill in regular installments throughout the year, rather than one lump sum at tax time.
7. Loss Carry-Back Returns for Companies
Companies with aggregated annual global turnover of less than $1 billion can once again carry back tax losses from the 2026-27 income year to offset tax paid in previous years and receive a refund.
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Additional benefit: Small start-up companies with turnover under $10 million will be eligible for loss refundability from 1 July 2028.
📖 What do these words mean?
- Loss Carry-Back: Allowing a business to apply current year tax losses against profits from previous years to receive a refund of tax already paid.
8. Enhanced R&D Tax Incentive
From 2028-29, the R&D Tax Incentive will be improved with increased offsets (up 25-50%), a lower intensity threshold (1.5% instead of 2%), and higher expenditure caps ($200 million).
(Source: Unsplash)
📖 What do these words mean?
- R&D Tax Incentive: A tax offset available to companies undertaking eligible research and development activities in Australia.
9. Permanent 25% FBT Discount for Electric Vehicles
The current FBT exemption for electric vehicles will transition to a permanent 25% discount from 1 April 2029, making electric vehicles more attractive for businesses even after the full exemption ends.
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📖 What do these words mean?
- FBT (Fringe Benefits Tax): A tax employers pay when they give staff non-cash perks (like a company car, free gym membership, or paying a personal bill).
10. 30% Minimum Tax on Discretionary Trusts
From 1 July 2028, trustees will pay a minimum tax of 30% on the taxable income of discretionary trusts, regardless of how income is distributed to beneficiaries.
(Source: Unsplash)
📖 What do these words mean?
- Discretionary Trust: A trust where the trustee has discretion to decide which beneficiaries receive income and how much.
The Bottom Line
The 2026-27 Federal Budget introduces significant changes to property investment, taxation, and business incentives. With many reforms phased in over the next few years, there's time to plan, but early action could maximise benefits. Whether you're an individual taxpayer, property investor, or business owner, these changes warrant a review of your current strategy.
Disclaimer: This blog is for educational purposes only and does not constitute formal financial or tax advice. Please consult a professional for advice specific to your situation.