2026 Budget!

Federal Budget 2026: Reform and Resilience in Uncertain Times

Treasurer Jim Chalmers has described the 2026 Federal Budget as one of the most ambitious budgets in decades, with a strong focus on “reform and resilience” amid ongoing global economic uncertainty.

Against a backdrop of rising oil prices, global instability, and inflationary pressure, the Federal Government has introduced a range of measures aimed at supporting households, reforming the tax system, improving housing affordability, and strengthening long-term economic productivity.

Economic Outlook

The Budget forecasts an underlying cash deficit of $31.5 billion for 2026–27, while Australia’s economy is still expected to outperform many advanced economies globally.

Inflation is forecast to rise temporarily to around 5 per cent, largely due to increased fuel and transport costs linked to global oil disruptions. Despite these pressures, the Government maintains its long-term objective of returning the budget to balance over time.

Key Tax Changes

One of the most discussed areas of the Budget is the proposed tax reform package affecting property investors and discretionary trusts.

Negative Gearing Changes

From 1 July 2027, negative gearing will no longer apply to established residential properties purchased after Budget night. Existing investments will remain unaffected under current rules.

Investors purchasing new builds will still be able to deduct losses against other income, while losses on established properties will only be deductible against future residential property income.

Capital Gains Tax Changes

The Government also announced changes to Capital Gains Tax (CGT), replacing the current 50 per cent CGT discount with cost-based indexation from 1 July 2027, alongside a new minimum 30 per cent tax rate on capital gains.

Importantly, the CGT settings for superannuation and self-managed super funds remain unchanged.

Discretionary Trusts

A new minimum tax rate of 30 per cent for discretionary trust distributions will apply from 1 July 2028. Certain structures, including fixed trusts and super funds, are excluded from the changes.

Cost of Living Relief

The Budget includes several measures designed to support Australian households without significantly increasing inflation, including:

• a $250 Working Australians Tax Offset,

• a $1,000 instant tax deduction for work-related expenses,

• and reductions to lower income tax rates from 2026 onwards.

Housing and Infrastructure

Housing affordability remains a major priority, with increased investment aimed at supporting new housing developments and infrastructure projects.

The Government has committed funding to support approximately 65,000 additional homes over the next decade, alongside infrastructure investment and measures to accelerate skilled migration within the construction industry.

Health and Aged Care

Additional funding has also been allocated to hospitals, aged care, and the NDIS. This includes increased hospital funding, support for aged care bed expansion, and measures aimed at improving sustainability and integrity within the NDIS system.

What This Means for Australians

The 2026 Federal Budget introduces significant reforms that may impact investment strategies, taxation, retirement planning, and long-term financial decisions.

As these changes develop, it is important to understand how they may apply to your personal circumstances and financial goals.

Before making any financial decisions, consider seeking personalised financial advice tailored to your situation.