On this page
- Income tax — cuts, WATO, instant deduction
- Property investment — negative gearing & CGT reform
- Superannuation — caps lift, Div 296
- Housing — Help to Buy expansion, foreign-buyer ban
- Health — PBS, bulk billing, PHI rebate cut
- Aged care — personal care now fully subsidised
- NDIS — $37.8bn in savings, Thriving Kids
- Families — PPL to 6 months, childcare 3-Day Guarantee
- Cost of living — fuel, energy, medicines
- Small business — $20k IAWO permanent
- Electric vehicles — FBT changes
- What didn't change — JobSeeker, Age Pension, HECS
- When everything kicks in
1. Income tax — cuts, WATO, and the $1,000 instant deduction
Three things matter for most workers.
Bracket cut continues (already legislated)
The 16% rate on income $18,201–$45,000 drops to 15% from 1 July 2026, then to 14% from 1 July 2027. This is Step 2 and Step 3 of the Stage 3+ cuts legislated in 2024 — not a Budget decision, but it starts in 7 weeks.
The saving: up to $268 per worker in 2026-27, then up to $536 every year from 1 July 2027.
$1,000 instant tax deduction (new)
From the 2026-27 income year, eligible workers can claim a flat $1,000 deduction for work-related expenses without receipts. Aimed at workers with low to moderate work-related spending.
Around 6.2 million workers (42% of taxpayers) are expected to use it — average saving $205 per worker in 2026-27. Workers with expenses above $1,000 can still itemise and claim more (with receipts).
Working Australians Tax Offset — $250 (new)
A new permanent $250 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.
Combined with the bracket cut and instant deduction, the Government projects up to $2,816 a year in tax savings for a worker from these measures.
What didn't change
- Brackets above $45,000 unchanged: 30% to $135k, 37% to $190k, 45% above
- Tax-free threshold still $18,200
- Medicare Levy still 2% (low-income thresholds indexed to $28,011 single, $47,238 family)
- LITO and SAPTO unchanged
- No Stage 4
For full bracket detail: Income tax brackets explained.
2. Property investment — the biggest reform since 1985
Negative gearing — limited to new builds
From 1 July 2027, losses on negatively geared established residential property can no longer be deducted from wages or salary income. Losses can still be carried forward to offset future rental income or capital gains on the same property.
The grandfathering is the most important detail. There are three groups:
- Owned at 7:30pm AEST on 12 May 2026 (Budget night) — fully grandfathered. No change. Existing investors keep full negative gearing.
- Purchased after Budget night but before 1 July 2027 — transitional rules; treat carefully and seek advice.
- Purchased on or after 1 July 2027 (established property) — losses ring-fenced.
- New builds, any date — full negative gearing retained.
The Government estimates this and the CGT change together will support an additional 75,000 homeowners over a decade by directing investment toward new construction.
Capital gains — 50% discount replaced with indexation
From 1 July 2027, the 50% CGT discount is replaced with:
- CPI-based cost-base indexation — you only pay tax on the real (inflation-adjusted) gain, similar to the rules that applied before 1999.
- 30% minimum tax on the indexed gain.
Applies to individuals, partnerships and trusts (not companies). Split treatment: pre-1 July 2027 gains keep the 50% discount; post-1 July 2027 gains use indexation. For new-build investors, the choice between 50% discount or indexation is retained.
What's protected
- Main residence exemption — fully retained. Your home is not affected.
- 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.
Related: Capital gains tax explained, DecisionLab: Negative gearing explained.
3. Superannuation — caps lift on 1 July 2026
The increases below are AWOTE indexation changes — mechanically triggered, not a new Budget decision — but they take effect 50 days after Budget night.
| Cap | 2025-26 | 2026-27 (from 1 July 2026) |
|---|---|---|
| Concessional contribution cap | $30,000 | $32,500 |
| Non-concessional cap | $120,000 | $130,000 |
| Bring-forward 3-year non-concessional | $360,000 | $390,000 |
| Transfer Balance Cap (pension phase) | $1.9M | $2.1M |
| Total Super Balance threshold (non-concessional eligibility) | $2.0M | $2.1M |
Division 296 — the $3M super tax
Division 296 (already legislated, restated in the Budget) applies an additional 15% tax on earnings attributable to super balances above $3 million from 1 July 2026. An additional 25% rate applies to balances above $10 million. Both apply to unrealised gains attributable to the portion of the balance above the threshold.
Super on Paid Parental Leave
The 12% Super Guarantee continues to apply to paid parental leave days. PPL extends to 26 weeks (130 days) from 1 July 2026, so the super amount paid mechanically rises — around $2,958 on minimum-wage PPL (more once the 1 July 2026 minimum wage increase flows through).
Super Guarantee rate
Stays at 12%. No further increases. The legislated progression finished on 1 July 2025.
Related: SortedAus super hub, SuperFind: contribution caps.
4. Housing — Help to Buy expansion and a 1985-style reform
Help to Buy — expanded
The Government's shared-equity scheme is being expanded:
- Income caps lift to $100,000 (single) and $160,000 (couple) — up from $90,000/$120,000.
- Property price caps rise: Sydney $1.3M, Brisbane $1M, Canberra $1M, regional medians elsewhere. Now covers "more than 5 million properties".
- Government continues taking 40% equity in new builds and 30% in existing properties.
- Total funding lifted to $6.3 billion (+$800M); targeting 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 vary by state and region.
Foreign investor ban — extended
The ban on foreign investors buying established dwellings is extended to mid-2029.
$2 billion Local Infrastructure Fund
Funds the boring-but-essential stuff — sewerage, water, power — to unlock around 65,000 new homes over a decade. From 2026-27.
$10 billion for 100,000 first-home-only homes
Confirmed in the Budget — construction begins 2026-27. Homes sold exclusively to first home buyers below market through grants or zero-interest loans co-invested with states.
Total housing investment
The Government calls this the largest housing package in Commonwealth history at $47 billion across the forwards.
Related: SortedAus housing hub, MortgageHelp: First home buyer guides.
5. Health — PBS, bulk billing and a PHI rebate cut for over-65s
$25 PBS general co-payment (already in effect)
Since 1 January 2026, the maximum general patient co-payment for a PBS prescription is $25 (down from $31.60). The Budget restated this. The concessional co-payment stays at $7.70 (frozen since 2024). Both index annually thereafter.
$5.9 billion in new PBS listings
Including a new cystic fibrosis treatment (saving patients an estimated $250,000/year), plus medicines for juvenile arthritis, MS, prostate / lymphoma / lung / bladder cancers, cerebral palsy and severe COVID-19.
RSV vaccine listed
$449.3 million to list Arexvy® (RSV vaccine) on the PBS.
$11.4 billion bulk billing investment
Builds on the existing tripled bulk-billing incentive. Target: 9 in 10 GP services bulk-billed by 2030. Current rate (Nov 2025 – Jan 2026) is 81.4%.
137 Urgent Care Clinics made permanent
$1.8 billion over 5 years plus $580.2 million ongoing to make all 137 Medicare Urgent Care Clinics permanent. Goal: four in five Australians within a 20-minute drive by July 2026.
$25 billion additional hospital funding
Total Commonwealth contribution to state and territory hospitals rises to $220.3 billion over 5 years.
PHI rebate — over-65 age uplift being removed
Under-65s are unaffected. The under-65 rebate continues to reindex annually on 1 April. Exact replacement rebate percentages, tier mechanics and the income-test interaction will be published by privatehealth.gov.au closer to the change. Older Australians on hospital cover should expect higher net premiums from April 2027 — rough estimates from peak bodies suggest $800–$1,600 more per year depending on policy and household structure.
Related: PHI rebate explained.
6. Aged care — personal care now fully subsidised
Total new aged care investment in this Budget: $3.7 billion.
Personal care fully subsidised ($1 billion)
The 1 November 2025 Aged Care Act introduced co-contributions for some personal care services. The Government is now walking that back — $1 billion to fully subsidise and remove co-contributions for personal care (showering, dressing, incontinence) through the Support at Home program.
$1.7 billion for residential beds
Capital subsidies to incentivise construction of up to 5,000 beds per year. Includes $606.5 million for 20 new Specialist Dementia Care units and an expanded Hospital to Aged Care program (11 to 20 locations).
$389.8 million to accelerate Support at Home
Faster release of packages and restructured affordability.
7. NDIS — $37.8bn in savings, Thriving Kids takes shape
Thriving Kids — $2 billion Commonwealth
A new early intervention program for under-8s with developmental delay or mild-to-moderate autism — part of the $5 billion Foundational Supports commitment to be matched by the states (total $4–5 billion depending on state contributions). The goal is to keep mild and moderate needs out of the NDIS through state-delivered foundational supports.
Planning framework changes
- The New Framework Planning (functional-needs based) rolls out from April 2027. $270 million for preparation.
- Eligibility shifts from diagnosis-led to standardised functional capacity assessments from 1 January 2028.
- Reductions in social and community participation supports flagged from October 2026.
Anti-fraud and oversight
- $358.5 million digital payment system.
- $280.1 million Fraud Fusion Taskforce continuation.
- $182.6 million provider regulation (with mandatory registration of higher-risk providers progressing).
- $49.4 million for plan management and support coordination reform — the Government will move toward commissioned plan management.
Disability Support Pension
No structural increase. Standard March / September CPI indexation only.
Related: ProviderScout: NDIS updates.
8. Families — PPL to 6 months and the 3-Day Childcare Guarantee
Paid Parental Leave — full 6 months from 1 July 2026
The final leg of the legislated PPL extension lands on 1 July 2026: government-funded PPL reaches 26 weeks (130 days). Up from 120 days in 2025-26. Super Guarantee at 12% continues to apply to PPL days.
Child Care Subsidy — 3-Day Guarantee
From July 2026, eligible families get three days a week of subsidised childcare regardless of work, study, or volunteering hours. Effectively removes the activity test for the first three days.
$21 billion for aged care and childcare worker pay rises
Funds the Fair Work Commission’s legislated wage increases across the forwards.
Family Tax Benefit / Carer Payment / Rent Assistance
Standard CPI indexation only. No structural Budget changes confirmed at time of writing. Services Australia will publish 2026-27 thresholds.
9. Cost of living — fuel, fuel, fuel
Fuel excise cut to 20.6c/L (3 months)
1 April to 30 June 2026: petrol and diesel excise cut from 52.6c to 20.6c/L — a $2.9 billion package. Heavy vehicle road user charge reduced to zero. Already in effect. The Budget did not extend the cut beyond 30 June 2026.
$14.8 billion fuel resilience package
Includes $10 billion in immediate fuel supplies and the Australian Fuel Security Reserve (stockpile extended to 50 days), $1.1 billion Cleaner Fuels Program, and a 20% gas export reservation for Australian users (legislation TBC).
Energy bill rebate — not extended
Based on currently-published Budget papers, the 2025-26 quarterly $75 energy bill rebate that ended 31 December 2025 has not been extended into 2026-27. We'll update if Treasury publishes additional detail.
Doubled competition penalties
Penalties for fuel and supermarket competition law breaches doubled to up to $100 million.
10. Small business — $20k IAWO permanent, loss carry-back returns
$20,000 Instant Asset Write-off — permanent
From 1 July 2026, the $20,000 IAWO becomes permanent (not just an annual top-up). Available to small businesses with turnover up to $10 million. Per-asset cap. Improves cashflow by ~$890M over 5 years.
Loss carry-back for companies up to $1 billion turnover
From 2026-27, eligible companies that make a loss can carry it back to get a refund against tax paid in the prior two income years. Around 85,000 companies eligible.
Loss refundability for start-ups
From 2028-29, start-ups in their first two years can get a refund of tax losses up to fringe benefits and withholding taxes paid on wages.
R&D Tax Incentive overhaul
From 1 July 2028: experimental core R&D offset increased 25-50%, intensity threshold reduced to 1.5%, refundable offset turnover threshold raised to $50 million, refundability limited to firms operating less than 10 years, maximum expenditure cap $200 million, minimum project $50,000.
PAYG monthly opt-in
From 1 July 2027, businesses can choose monthly PAYG instalments (currently quarterly). Dynamic instalments pilot expanded through business software.
Discretionary trust minimum tax
From 1 July 2028, a 30% minimum tax applies to discretionary trust income distributed to non-corporate beneficiaries. Beneficiaries receive a non-refundable credit. Excludes fixed trusts, widely-held trusts, super funds and charitable trusts. 3-year rollover relief 1 July 2027 to 30 June 2030.
11. Electric vehicles — 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.
If you're in or considering a novated lease on an EV: getting the arrangement in place under the current rules (before April 2027 for cars over $75k, or before April 2029 for cars under) preserves the existing benefit.
12. What didn't change — the headlines that weren't
- JobSeeker — no structural increase. CPI indexation only (20 March 2026 and 20 September 2026). The Economic Inclusion Advisory Committee’s recommendation to lift JobSeeker to 90% of the Age Pension was not adopted.
- Age Pension rates — standard 20 March 2026 indexation already applied (+$22.20/ft single, +$33.40/ft couple combined). No further Budget increase.
- Disability Support Pension — no structural increase beyond indexation.
- HECS / HELP — no further changes. The 1 July 2025 marginal repayment system (nil to $67k, 15c to $125k, +17c to $179,285, then 10% of total) continues. ATO sets the 1 June 2026 indexation rate in late May.
- Super Guarantee — stays at 12%. No further increases planned.
- GST — no changes.
- Stage 4 tax cuts — not announced. WATO plus the bracket cut to 14% (1 July 2027) is the next step.
13. When everything kicks in — the timeline
| Date | What happens |
|---|---|
| Already in effect | $25 PBS general co-payment (since 1 Jan 2026); 20 March 2026 Age Pension & deeming rate changes; fuel excise 20.6c/L through 30 June 2026. |
| 1 Jul 2026 | Tax bracket 16% → 15%. $1,000 instant tax deduction. Super caps lift (concessional $32,500, non-concessional $130,000, TBC $2.1M). Division 296 (15% on $3M+, 25% on $10M+) starts. PPL extends to 26 weeks. Childcare 3-Day Guarantee. $20k IAWO permanent. Loss carry-back for companies 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 (grandfathering applies). CGT 50% discount replaced with indexation + 30% min tax. WATO $250 from 2027-28. PAYG monthly opt-in. |
| 1 Jan 2028 | NDIS eligibility shifts to functional capacity assessments. |
| 1 Jul 2028 | Discretionary trust 30% minimum tax. R&D Tax Incentive reform. Start-up loss refundability. |
| 1 Apr 2029 | EV FBT permanent regime — 25% discount across all eligible EVs. |
| Mid 2029 | Foreign investor ban on established dwellings expires. |
Macro context
- Underlying cash deficit 2026-27: $31.5 billion ($2.8bn better than MYEFO).
- Total savings package: $63.8 billion. Net Budget improvement with provisions: $26.1 billion.
- Long-term path: balanced budget 2034-35, surplus 0.8% of GDP by 2036-37 on Treasury projections.
- Gross debt: $982 billion.
- GDP growth 2026-27 forecast: 1.75% (down 0.5ppt from MYEFO).
- Inflation: forecast to peak at 5.0% in Q2 2026 (fuel / Middle East shock) before falling to 2.5% by Q2 2027.
Frequently asked questions
What were the biggest tax changes in the 2026-27 Budget?
Three new tax measures stand out. First, a $1,000 instant tax deduction for work expenses without receipts from the 2026-27 income year (1 July 2026). Second, a new $250 Working Australians Tax Offset (WATO) from 2027-28. Third, the existing Stage 3+ bracket cut still kicks in on 1 July 2026, dropping the 16% rate to 15% on income $18,201–$45,000 — saving up to $268 per worker that year, then up to $536/year from 1 July 2027 when the same bracket drops to 14%.
What is changing for negative gearing?
From 1 July 2027, negative gearing on established residential property will be limited to new builds. Properties already owned at 7:30pm AEST on 12 May 2026 (Budget night) are grandfathered — existing investors are unaffected and keep full deductibility. Established properties purchased after Budget night but before 1 July 2027 sit in a transitional window. From 1 July 2027, losses on newly-acquired established property can no longer offset wages or salary; they carry forward to offset future rental income or capital gains on the same property.
What happened to the 50% capital gains tax discount?
From 1 July 2027, the flat 50% CGT discount is replaced with CPI-based cost-base indexation plus a minimum 30% tax on the real (inflation-adjusted) gain. Applies to individuals, partnerships and trusts (companies unaffected). Gains accrued before 1 July 2027 keep the 50% discount under transitional split-treatment rules. Main residence exemption, small business CGT concessions and the 60% affordable-housing discount are fully retained. Age Pension and JobSeeker recipients are exempt from the 30% minimum in the year of realisation.
Did super contribution caps change?
The concessional cap rises from $30,000 to $32,500 and the non-concessional cap from $120,000 to $130,000 on 1 July 2026. The bring-forward 3-year non-concessional cap rises from $360,000 to $390,000. The Transfer Balance Cap (pension phase) lifts from $1.9M to $2.1M and the Total Super Balance threshold for non-concessional eligibility from $2.0M to $2.1M. These are AWOTE indexation changes — not a Budget decision — but they take effect on Budget Day plus 50 days.
Is the energy bill rebate being extended?
Based on currently-published Budget papers, the 2025-26 quarterly $75 energy bill rebate that ended 31 December 2025 has not been extended into 2026-27. The Budget instead invests in fuel security ($14.8bn) and extends the fuel excise cut (52.6c to 20.6c/L) for 3 months from 1 April to 30 June 2026 — already in effect. We'll update this section if Treasury publishes additional rebate detail.
What did the Budget change for private health insurance?
The Government announced it will remove the higher PHI rebate tier paid to Australians aged over 65 and over 70 from 1 April 2027. Health Minister Mark Butler said the budget will "return the rebate for older Australians back to the level paid for everyone else" and use the savings (reportedly around $3 billion over 4 years) for aged care. This is a significant change — older Australians on hospital cover should expect higher premiums from April 2027. Exact replacement rebate percentages and tier mechanics will be published by privatehealth.gov.au closer to the change.
What changed for first home buyers?
The Help to Buy shared-equity scheme is expanding. Income caps lift to $100,000 for singles and $160,000 for couples. Property price caps rise (Sydney $1.3M, Brisbane $1M, Canberra $1M, regional medians aligned). Government continues taking 40% equity in new builds and 30% in existing. The First Home Guarantee remains as expanded on 1 October 2025: unlimited places, no income caps, 5% deposit, LMI waived. Foreign investor ban on established dwellings is extended to mid-2029.
Did JobSeeker or the Age Pension get a Budget increase?
No structural increase. JobSeeker and DSP rates continue under standard CPI indexation only (20 March / 20 September). Age Pension already received its 20 March 2026 indexation (+$22.20/fortnight single, +$33.40/fortnight couple combined) before the Budget. The Economic Inclusion Advisory Committee's recommendation to lift JobSeeker to 90% of Age Pension was not adopted.
Was HECS changed again?
No further HECS changes in this Budget. The new marginal repayment system that started 1 July 2025 continues (nil to $67,000, 15c/$1 to $125,000, then $8,700 + 17c/$1 to $179,285, then 10% of total income). ATO sets the 1 June 2026 indexation rate in late May based on the lower of CPI / WPI.
What about EV novated leases?
The FBT exemption for electric cars is being tightened in stages. EVs over $75,000 drop from full FBT exemption to a 25% FBT discount on 1 April 2027. EVs under $75,000 keep the full exemption if the lease arrangement begins before 1 April 2029. From 1 April 2029, all eligible EVs use the 25% FBT discount. If you're considering an EV novated lease, getting the arrangement in place under current rules preserves the existing benefit.