Federal Budget 2026
The Federal Budget delivered on 12 May 2026 included a range of proposed changes across tax, investment property, capital gains tax, family trusts, small business, aged care and support services.
Many of the measures are not yet law and the final details may change. However, some proposals may be relevant when reviewing investment structures, property strategies, family trust arrangements, retirement planning, aged care needs and small business cash flow.
This summary focuses on the measures most likely to affect individuals, families, investors and business owners from a personal financial planning perspective.
At a glance: key areas to review
| Area | Proposed change | Who may be affected |
|---|---|---|
| Personal tax | New worker tax offset, lower marginal tax rate and a $1,000 instant work-related deduction. | Employees and working Australians. |
| Investment property | Restrictions to negative gearing on established residential property purchased after Budget night. | Property investors. |
| Capital gains tax | 50% CGT discount to be replaced with CPI indexation for future gains, plus a 30% minimum tax rate. | Investors holding property, shares and other growth assets. |
| Family trusts | Minimum 30% tax on discretionary trust income, subject to exceptions. | Families, business owners and investors using trusts. |
| Small business | Permanent $20,000 instant asset write-off and other company tax measures. | Small business owners and companies. |
| Health and aged care | Changes to private health insurance rebates, Support at Home and residential aged care funding. | Retirees, older Australians and their families. |
| Superannuation | No major new superannuation changes announced, though previously legislated measures remain relevant. | Super fund members, particularly higher balance members. |
Personal tax changes
Several measures are designed to reduce or simplify tax for working Australians.
From the 2027-28 financial year, the Government has proposed a new Working Australians Tax Offset of up to $250 per year for eligible working Australians.
The already legislated tax cuts were also reaffirmed. The lowest marginal tax rate applying to taxable income between $18,201 and $45,000 is scheduled to reduce from 16% to 15% from 1 July 2026, and then to 14% from 1 July 2027.
From the 2026-27 income year, eligible workers may also be able to claim an instant $1,000 tax deduction for work-related expenses without needing to keep receipts for that amount. If work-related expenses exceed $1,000, taxpayers may still claim the actual amount, but supporting records would be required.
What this may mean
For many employees, tax time may become simpler. However, it will still be sensible to keep receipts, particularly where work-related expenses may exceed $1,000. The benefit of these measures will depend on income level, employment circumstances and other offsets or deductions.
Investment property and negative gearing
A significant proposal relates to negative gearing on residential investment property.
From 1 July 2027, losses from established residential investment properties purchased after 7:30pm AEST on 12 May 2026 would no longer be able to reduce other income, such as salary or wages. Instead, those losses could generally be used against residential rental income or residential property capital gains, with unused losses carried forward.
Properties already held before Budget night would retain existing treatment. Certain newly built residential properties would also be excluded from the proposed restrictions.
What this may mean
The after-tax position of some property investment strategies may change, particularly where an investor was relying on rental losses to reduce taxable income from other sources. Existing property investors should review their current strategy before assuming the changes apply to them. Prospective investors may need to consider whether the expected return still justifies the debt, cash flow and concentration risks involved.
Capital gains tax changes
The Government has proposed changes to the way capital gains are taxed from 1 July 2027.
Broadly, the current 50% CGT discount for assets held longer than 12 months would be replaced with a CPI-based indexation method for gains accruing after 1 July 2027. Under this method, the cost base of an eligible asset would be adjusted for inflation before calculating the taxable capital gain.
A minimum tax rate of 30% would also apply to real capital gains accruing from 1 July 2027, subject to certain exceptions. People receiving means-tested income support payments, such as the Age Pension, would not be subject to the minimum tax rate for the relevant year.
The proposed changes are expected to apply to individuals, trusts and partnerships. Companies and superannuation funds, including SMSFs, are not expected to be impacted in the same way. The main residence exemption and existing small business CGT concessions are not proposed to change.
What this may mean
For investors, the impact will vary depending on the type of asset, ownership structure, holding period, inflation and future capital growth. The changes may also make record keeping more important, particularly for assets held across the transition date.
Investors may need to review where growth assets are held, whether existing ownership structures remain appropriate, and how future capital gains may be managed.
Family trusts and discretionary trusts
From 1 July 2028, discretionary trusts would generally be subject to a minimum 30% tax rate on trust income, subject to exceptions.
The proposal is intended to reduce the tax benefit of distributing trust income to beneficiaries on lower marginal tax rates. Some types of trusts and income are expected to be excluded, and a three-year rollover relief window from 1 July 2027 is proposed to assist some small businesses and others who may wish to restructure.
What this may mean
Family trusts may still provide non-tax benefits, including asset protection, succession planning, control and family wealth management. However, families and business owners using trusts should review the role of the structure and the likely tax impact under the proposed rules.
Any restructure should be considered carefully with financial, legal and tax advice, as moving assets out of a trust can have tax, duty and asset protection consequences.
Small business measures
For small businesses, the Budget included several cash flow and tax measures.
From 1 July 2026, the instant asset write-off threshold is proposed to be permanently set at $20,000 for eligible small businesses with aggregated turnover below $10 million. This would allow eligible assets costing less than $20,000 to be immediately deducted, rather than depreciated over time.
The Budget also included proposed measures for company loss carry-back and tax loss refundability for certain start-up companies.
What this may mean
Business owners may benefit from improved cash flow when purchasing eligible assets. However, spending should still be commercially justified. A tax deduction reduces taxable income, but it does not make an unnecessary purchase worthwhile.
Superannuation
No major new superannuation changes were announced in the Budget.
However, previously legislated measures remain relevant, including the Division 296 tax for individuals with total superannuation balances above $3 million from 1 July 2026, and the expansion of the Low Income Superannuation Tax Offset from 1 July 2027.
What this may mean
For most people, superannuation remains a key long-term retirement savings vehicle. Higher balance members should continue to monitor the Division 296 rules and consider how they may affect future retirement planning.
Private health insurance and electric vehicles
From 1 April 2027, older Australians would no longer receive a higher private health insurance rebate purely because of age. Income tiers would still apply, but for some people aged 65 and over, the change may increase net premium costs.
The Budget also proposes to scale back the fringe benefits tax concession for eligible electric vehicles. From 1 April 2027, the full exemption would generally be limited to eligible EVs costing $75,000 or less, before moving to a 25% FBT discount for all eligible EVs from 1 April 2029.
What this may mean
Retirees and older Australians may wish to review their health insurance arrangements at renewal. Employees considering an EV through salary packaging or a novated lease should compare the after-tax cost under current and future rules before entering a new arrangement.
Aged care, home care and NDIS
The Budget includes additional funding for aged care and changes to Support at Home.
More Support at Home packages are expected to be released. From 1 October 2026, certain personal care services, such as showering and dressing, are proposed to be reclassified so they can be accessed without out-of-pocket co-contributions.
Additional funding is also proposed for residential aged care, including measures to support more beds and improved access for low-means residents.
The Budget also includes NDIS reforms focused on eligibility, assessment, provider oversight, plan management and system integrity.
What this may mean
Older Australians and their families may need to review care options, likely future needs and the financial impact of moving between home care and residential aged care. For families involved with the NDIS, the changes may affect future assessments, planning processes and the types of supports funded over time.
What should you do now?
Most measures are proposals and may change before becoming law. For that reason, it is usually best to avoid making major decisions based only on Budget announcements.
That said, the Budget may prompt a useful review of:
investment ownership structures
negatively geared property strategies
family trust arrangements
future capital gains tax exposure
small business asset purchases
retirement planning and superannuation balances
aged care and home care funding needs
If you would like to begin a discussion, or if you are not currently a client and would like to understand how the Budget may affect your personal or business financial position, please don’t hesitate to reach out.
General Advice Warning:
Any general advice on this page does not take account of your personal objectives, financial situation and needs, and because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Information contained on this page was correct at the time of posting.
