Federal Budget 2026-27: The Numbers That Actually Affect You
Treasurer Chalmers handed down the 2026-27 Budget at 7:30pm AEST on Tuesday 12 May. Below is what changes in dollars, with effective dates, grandfathering rules, and the things that didn't change — with worked examples where they matter.
1. Income tax — up to $268 this year, $1,536 next year
Three measures combine to give the headline saving of up to $2,816 per worker by 2027-28 — the Government's preferred framing. The breakdown:
Bracket cut: $268 (1 Jul 2026), $536 (1 Jul 2027)
The 16% rate on the $18,201–$45,000 band drops to 15% from 1 July 2026, then 14% from 1 July 2027. This is Step 2 and Step 3 of the Stage 3+ cuts legislated in 2024 — not new in this Budget, but they kick in 7 weeks from now.
The maximum saving applies to anyone earning $45,000 or more. The full numbers:
- $45,000 of income in the band × 1% cut = $268.10 in 2026-27
- $45,000 of income in the band × 2% cut = $536.20 from 2027-28 (cumulative with the 2026 step: $804 vs. the pre-cut rate)
Use our take-home pay calculator to see the exact impact on your income.
$1,000 instant deduction: average saving $205
From the 2026-27 income year, eligible workers can claim a flat $1,000 deduction for work-related expenses without receipts. The Government estimates 6.2 million workers will use it — 42% of taxpayers — with an average saving of $205. The deduction is a floor, not a cap: if your actual expenses exceed $1,000 you can still itemise and claim more (with receipts).
WATO: $250 from 2027-28
A new permanent $250 Working Australians Tax Offset from the 2027-28 income year. Covers 13.3 million workers plus 1.5 million sole traders. 97% receive the full amount. Applies to wages and sole-trader business income only.
Tax saved 2025-26 vs 2026-27 (just the bracket cut): $268.
Add the instant deduction at 30% marginal rate: +$300 (if you weren't claiming work expenses already). So FY 2026-27 worst-case win: $568.
2027-28 adds another $268 (bracket cut step 2) + $250 (WATO) = $1,086 above 2025-26 levels.
2. Property investment — the 1985-style reform
Negative gearing — limited to new builds (1 July 2027)
From 1 July 2027, losses on negatively geared established residential property can no longer offset wages or salary. Losses can still be carried forward to offset future rental income or capital gains on the same property.
Grandfathering is the most important detail. Four groups:
- Owned at 7:30pm AEST on 12 May 2026 (Budget night) — fully grandfathered. No change to negative gearing for existing investors.
- Established property purchased after Budget night but before 1 July 2027 — transitional rules.
- Established property purchased on or after 1 July 2027 — losses ring-fenced.
- New builds, any date — full negative gearing retained.
Read more: negative gearing explained.
CGT 50% discount replaced with indexation (1 July 2027)
For individuals, partnerships and trusts (not companies), the 50% CGT discount on gains held over 12 months is being replaced with:
- CPI-based cost-base indexation — you only pay tax on the real (inflation-adjusted) gain. This is similar to the rules that applied before 1999.
- 30% minimum tax on the indexed gain.
Split treatment applies: gains accrued before 1 July 2027 keep the 50% discount; post-1 July 2027 gains use indexation. For new-build investors, the choice between the 50% discount and indexation is retained.
What's protected
- Main residence exemption — fully retained. Your home is unaffected.
- Small business CGT concessions — fully retained.
- 60% affordable housing discount — retained.
- Age Pension and JobSeeker recipients are exempt from the 30% minimum in the year of realisation.
Bought for $700,000 on 1 January 2026 (pre-Budget). Sold for $1,050,000 on 1 January 2031.
Nominal gain: $350,000. Average CPI over the period: assume 3%/year.
Under old rules: 50% discount on $350k = $175k taxable. At 37% marginal: ~$64,750 tax.
Under split rule (purchased pre-Budget): The pre-1 July 2027 portion still gets the 50% discount. Post-1 July 2027 portion uses indexation + 30% minimum.
The exact split depends on Treasury's transitional formula — details to be confirmed.
3. Superannuation — caps lift on 1 July 2026
Indexation, not Budget decisions — but the changes take effect 50 days after Budget night.
| Cap | 2025-26 | 2026-27 | Change |
|---|---|---|---|
| Concessional contribution cap | $30,000 | $32,500 | +$2,500 |
| Non-concessional cap | $120,000 | $130,000 | +$10,000 |
| Bring-forward 3-year non-concessional | $360,000 | $390,000 | +$30,000 |
| Transfer Balance Cap | $1.9M | $2.1M | +$200k |
| TSB threshold (non-concessional) | $2.0M | $2.1M | +$100k |
Division 296 — the $3M super tax
Already legislated, restated in the Budget. From 1 July 2026:
- An additional 15% tax on earnings attributable to super balances above $3 million.
- An additional 25% tax on the portion attributable to balances above $10 million.
- Applies to unrealised gains attributable to the portion of the balance above the threshold.
Super on Paid Parental Leave
12% Super Guarantee continues on PPL. PPL extends to 26 weeks (130 days) from 1 July 2026, so the super amount paid on PPL mechanically rises — around $2,958 on minimum-wage PPL.
Super Guarantee rate
Stays at 12%. No further increases.
Calculator: super balance projection.
4. Housing — Help to Buy expands, foreign-buyer ban extended
Help to Buy — income and price caps lifted
| Parameter | Previous | New |
|---|---|---|
| Income cap — single | $90,000 | $100,000 |
| Income cap — couple | $120,000 | $160,000 |
| Property price cap — Sydney | ~$950,000 | $1.3M |
| Property price cap — Brisbane | Lower | $1M |
| Property price cap — Canberra | Lower | $1M |
| Total scheme funding | $5.5bn | $6.3bn |
Government continues taking 40% equity in new builds, 30% in existing. The scheme targets 40,000 buyers over 4 years.
First Home Guarantee — unchanged
The 1 October 2025 expansion remains: unlimited places, no income caps, 5% deposit, LMI waived. Property price caps still apply by state and region.
Foreign investor ban — extended to mid-2029
$2 billion Local Infrastructure Fund
Funds power, water, sewerage for housing — unlocking around 65,000 new homes over a decade. From 2026-27.
Related: first home buyer guide, how to save for a deposit.
5. Health — bulk billing up, PHI rebate down for over-65s
$11.4bn for bulk billing
Target: 9 in 10 GP services bulk-billed by 2030. Current rate (Nov 2025–Jan 2026): 81.4%.
137 Urgent Care Clinics made permanent
$1.8bn over 5 years plus $580.2M ongoing. Goal: four in five Australians within a 20-minute drive by July 2026.
$25 PBS general co-payment (already in effect)
Since 1 January 2026, the max general co-payment for a PBS prescription is $25 (down from $31.60). Concessional stays at $7.70.
$5.9bn new PBS listings
Including a new cystic fibrosis treatment (~$250k/year saving per patient), juvenile arthritis, MS, prostate / lymphoma / lung / bladder cancers.
PHI rebate — over-65 age uplift being removed
Reported impact for affected members: around $800-$1,600 per year more in premiums depending on policy and household structure. Under-65s are unaffected. Exact replacement rebate percentages and tier mechanics will be published by privatehealth.gov.au closer to the change.
6. Aged care — personal care now fully subsidised
$3.7 billion total new investment. The headline: $1 billion to fully subsidise personal care (showering, dressing, incontinence) through Support at Home — walking back the partial co-contributions introduced by the 1 November 2025 Aged Care Act. Plus $1.7bn for up to 5,000 new beds/year + $606.5M for Specialist Dementia Care.
7. NDIS — $37.8bn in savings, Thriving Kids
The reform announced 22 April 2026 now has costed numbers:
- $37.8bn savings over 4 years; annual scheme growth cut to 2%.
- Participant trajectory: ~770,000 today, projected toward 600,000 by 2030.
- $2bn Thriving Kids program (part of $5bn Foundational Supports matched by states) — early intervention for under-8s with developmental delay / mild to moderate autism, designed to keep them out of NDIS.
- New Framework Planning (functional capacity assessments) rolls out from April 2027.
- Eligibility shifts to functional capacity assessments from 1 January 2028.
- $358.5M digital payment system, $280.1M Fraud Fusion Taskforce continuation.
8. EV FBT — exemption tightens
The full FBT exemption for electric cars is being unwound in stages:
- Cars over $75,000: 25% FBT discount from 1 April 2027 (full exemption ends).
- Cars under $75,000: full FBT exemption continues if the arrangement commences before 1 April 2029.
- All eligible EVs: 25% FBT discount from 1 April 2029 (permanent regime).
Considering a novated lease on an EV? Getting the arrangement in place under current rules preserves the existing benefit.
Related: novated lease explained.
9. Small business
- $20,000 Instant Asset Write-off — permanent from 1 July 2026. Turnover up to $10M.
- Loss carry-back returns for companies up to $1bn turnover from 2026-27 (~85,000 companies eligible).
- PAYG monthly opt-in from 1 July 2027.
- Start-up loss refundability from 2028-29 (up to FBT + PAYG paid).
- R&D Tax Incentive overhaul from 1 July 2028: 25-50% increase in experimental core offset, intensity threshold 1.5%, refundable turnover threshold $50M, minimum project $50k, maximum $200M.
- Discretionary trust 30% minimum tax from 1 July 2028 (distributions to non-corporate beneficiaries). 3-year rollover relief 1 July 2027–30 June 2030.
10. What didn't change
- JobSeeker — no structural increase. CPI indexation only.
- Age Pension rates — only the 20 March 2026 indexation already applied.
- HECS / HELP — no further changes. New marginal repayment system (nil to $67k, 15c to $125k, +17c to $179,285, 10% top) continues.
- Super Guarantee — stays at 12%.
- GST — no changes.
- Stage 4 tax cuts — not announced.
- Energy bill rebate — the 2025-26 measure that ended 31 December 2025 does not appear to be extended (verify against full Budget Papers).
The timeline
| Date | What kicks in |
|---|---|
| 1 Jul 2026 | Tax bracket 16% → 15%. $1,000 instant tax deduction. Super caps lift. Division 296 starts. PPL to 26 weeks. Childcare 3-Day Guarantee. $20k IAWO permanent. Loss carry-back returns. |
| 1 Apr 2027 | PHI rebate over-65 age uplift removed. EV FBT for cars over $75k drops to 25% discount. |
| 1 Jul 2027 | Tax bracket 15% → 14%. Negative gearing limited to new builds. CGT 50% discount replaced with indexation + 30% min. WATO $250. PAYG monthly opt-in. NDIS New Framework Planning from April. |
| 1 Jan 2028 | NDIS eligibility shifts to functional capacity assessments. |
| 1 Jul 2028 | Discretionary trust 30% min tax. R&D Tax Incentive reform. Start-up loss refundability. |
| 1 Apr 2029 | EV FBT permanent regime — 25% discount across all eligible EVs. |
Try the calculators
Use our take-home pay calculator to see the bracket-cut impact on your income, or the super balance projection to model the new $32,500 concessional cap over time.
All Calculators →