Federal Budget 2026-27 Summary — Every AU Tax Measure

General information only. This is not tax or financial advice. All figures verified against Treasury Budget Paper No. 1 Statement 4, Budget Paper No. 2, the official tax explainer fact sheets released 7:30 pm AEST, 12 May 2026, and — for the legislated measures — the Acts as passed in June 2026.

Treasurer Jim Chalmers handed down the 2026-27 Federal Budget at 7:30 PM AEST on Tuesday 12 May 2026. The Budget combines new income tax cuts for workers with the most significant property tax reform since 1999. This article catalogues every announced tax measure with effective dates and dollar figures.

Update, July 2026 — the core tax package is now law. The CGT discount reform, negative gearing reform, $250 WATO and $1,000 instant tax deduction passed both Houses on 25 June 2026 and received royal assent on 26 June 2026 as the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) and the Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026), carried via a Labor-Greens deal with 33 Senate amendments. The sections below reflect the Acts as passed, with Senate changes noted where they altered the May proposal.

Headline figures

• $2,816 maximum combined annual tax benefit for an average earner by 2027-28 (vs 2023-24 settings) — combining three legislated tax cut rounds, the $1,000 Instant Tax Deduction, and the $250 Working Australians Tax Offset.
• 75,000 additional owner-occupiers projected over the next decade from negative gearing + CGT reform (Treasury modelling). House price growth expected ~2% lower over a couple of years; rent impact <$2/week on median rent.
• $3.5 billion in new business tax measures (loss carry-back, R&D incentive, VC, permanent IAWO, start-up loss refundability) — unlike the personal-tax package, these are not yet law as at July 2026: permanent IAWO + loss carry-back sit in the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, still before Parliament.
• $10.2 billion/year regulatory burden reduction.
• $63.8 billion in savings and reprioritisations underpinning the position.

Tax cuts for workers

$1,000 Instant Tax Deduction — from 2026-27 income year (now law)

Now law: Schedule 4 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026), applying from 2026-27 assessments. Resident individuals with labour income can claim up to $1,000 of work-related expenses without keeping receipts when lodging their tax return for 2026-27 onwards, in lieu of claiming actual work-related expenses.

• 6.2 million workers (42% of taxpayers) benefit
• Average tax saving $205 in 2026-27
• Compliance saving ~$380 million annually
• Taxpayers claiming MORE than $1,000 in work-related expenses can still do so in the usual way with substantiation. Charitable donations, union/professional fees, and other non-work-related deductions still claimable on top.

$250 Working Australians Tax Offset (WATO) — from 2027-28 income year (now law)

A permanent annual tax offset of up to $250 for income earned from work (wages, salaries, sole-trader business income). Legislated in Act 49 of 2026 as a statutory formula (not a ministerial instrument, as at one stage proposed).

• 13 million workers benefit (including 6.3 million women, 97% receive the full $250). Also available to sole traders running their own business.
• Raises effective tax-free threshold by ~$1,800 to $19,985 for workers ($24,985 for those eligible for LITO) — the largest permanent increase since 2012-13
• Applied automatically at lodgement of 2027-28 returns

Medicare Levy low-income thresholds — raised 2.9%, retroactive to 1 July 2025

Over 1 million Australians benefit. Already reflected in 2025-26 returns.

Combined annual tax cut by income level

Property tax reform

Negative gearing reform — from 1 July 2027 (now law)

Negative gearing for established residential property is restructured (Schedule 2 of Act 49 of 2026): from 2027-28, net rental losses on residential dwellings are deductible only against residential-property income and gains, carried forward otherwise. The reform is bucketed by purchase date — see Negative Gearing Reform: 4-Bucket Explainer.

• Properties held at 7:30 PM AEST 12 May 2026 (including signed contracts): grandfathered, with no per-taxpayer dwelling limit (a circulated “one dwelling only” amendment did not pass).
• Properties bought 12 May 2026 7:30 PM – 30 June 2027: transitional. Negative gearing against any income until 30 June 2027; from 1 July 2027, losses only offset other residential property income (carry-forward).
• Established property bought from 1 July 2027: rental losses can only offset other residential property income, not wages.
• New builds bought from 1 July 2027: full negative gearing retained.

New build = vacant-land construction, off-the-plan, knock-down rebuilds adding dwellings. Subsequent investor purchase loses new-build status. Widely-held trusts and super funds (incl. SMSFs) are excluded from the changes.

50% CGT discount reform — from 1 July 2027 (now law)

The 50% CGT discount is replaced by CPI cost base indexation plus a 30% minimum tax on real capital gains for assets held ≥12 months (new Div 119). Legislated 25-26 June 2026 as Acts 49 and 50 of 2026. See CGT Discount Reform: Cost Base Indexation Explained.

• Applies to individuals, partnerships, trusts. Companies unaffected. Complying super funds keep the 33 1/3% discount (excluded from the new regime). Foreign and temporary residents are excluded from indexation.
• Transitional split (Subdiv 112-E “deemed sale”) for assets held at 30 June 2027: the asset is deemed disposed just before 1 July 2027 and reacquired. The pre-1 July 2027 notional gain is calculated under the old law (50% discount preserved) and deferred until actual sale; post-1 July 2027 growth is taxed under the new rules.
• The split uses market valuation at 1 July 2027 as the primary method, or a Minister-determined apportioning method by taxpayer election (ss 112-155(3)/112-165(3)). Owners should obtain and keep evidence of market value at 1 July 2027.
• New residential dwellings are the only asset class retaining the 50% discount (taxpayer’s choice of discount or indexation; choosing indexation opts the gain into the minimum tax). The proposed ministerial power to add further asset classes was removed by Senate amendment.
• 30% minimum tax exemption for welfare recipients — a hard-coded statutory list (s 119-15): Age Pension, DSP, JobSeeker, Carer Payment, Parenting Payment, FTB and other listed payments. Recipients are exempt from the minimum tax only in years they realise a gain; they do not keep the 50% discount — their gains still move to indexation.
• Charity fix (Senate amendment): the minimum-tax base is reduced by Div 30 gift/donation deductions and Div 31 conservation covenant deductions.
• Pre-CGT assets (acquired before 20 September 1985): gains accruing after 1 July 2027 become taxable; pre-July-2027 accruals stay exempt.
• Effective discount equivalent over past 20 years: 36-59% depending on asset class and holding period.

What is retained

• Main residence CGT exemption — fully retained
• Small business CGT concessions (all 4) — retained; the 50% active-asset reduction (Subdiv 152-C) turnover threshold rises from $2m to $10m aggregated turnover from the income year including 1 July 2027 (Senate amendment). The 15-year exemption, retirement exemption and rollover keep the $2m turnover / $6m net-asset tests. The 50% reduction stacks with the discount or indexation.
• 60% affordable housing CGT discount — fully retained
• 12-month holding rule eligibility — unchanged
• Pre-1985 asset exemption for gains accrued before 1 July 2027

Foreign Resident CGT — transitional concession

Time-limited concession in the foreign-resident CGT regime for investment in the renewables sector. Transitional applies to foreign investors disposing of certain renewable energy infrastructure assets through to 30 June 2030. Plus: “real property” in Australia determined by Commonwealth (not state/territory) law, effective 12 December 2006 (clarification).

Superannuation

No new super cap announcements in this Budget. The following continue at current levels (ATO publishes AWOTE/CPI-indexed values mid-year):

• Concessional cap: $30,000
• Non-concessional cap: $120,000 (= 4× concessional)
• Bring-forward cap: $360,000
• Carry-forward TSB cap: $500,000
• Division 293 threshold: $250,000
• Government co-contribution thresholds, FHSS caps, spouse offset — unchanged

Division 296 (>$3M super balances) was not modified by Budget 2026. The legislated regime commences 1 July 2026 as scheduled: +15% on earnings (30% total) for $3M-$10M balances; +25% (40% total) above $10M.

SMSF LRBA restriction — new via Senate amendment (Greens). Limited recourse borrowing arrangements over real property are restricted to business real property for new borrowings from 10 August 2026 (45 days after assent to Act 49 of 2026). Existing and refinanced arrangements are grandfathered.

Discretionary trust minimum tax — from 1 July 2028

A 30% minimum tax on discretionary trusts applies to trust income from 1 July 2028.

• Trustee pays the minimum tax on taxable trust income (unless higher rates apply via beneficiary distribution)
• Non-corporate beneficiaries get non-refundable tax credits for tax paid by trustee
• Corporate beneficiaries do NOT get non-refundable credits (anti-bucket-company rule)
• Excluded: fixed trusts, widely-held trusts (most MITs), complying super funds, special disability trusts, deceased estates, charitable trusts
• Excluded income: primary production, certain income to vulnerable minors, non-resident withholding amounts, income from testamentary trusts existing at announcement
• Rollover relief from income tax + CGT for restructure out of discretionary trusts: 3 years from 1 July 2027 (until 30 June 2030). Australian Small Business and Family Enterprise Ombudsman supports small biz restructure decisions from 1 January 2027.

Impact: 95% of individual taxfilers unaffected. ~810,000 adults receive trust distributions yearly. ~40% of the ~350,000 small businesses using discretionary trusts may pay additional tax or restructure.

Business tax measures

Status (July 2026): unlike the personal-tax package, the business measures below are not yet law. The permanent IAWO and loss carry-back are in the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 (introduced 25 June 2026, before Parliament; Senate committee report due 13 August 2026); the 2027-29 measures await their own legislation.

Instant Asset Write-Off — permanent at $20,000 from 1 July 2026 (proposed)

Small businesses with turnover under $10 million would be able to immediately deduct eligible assets costing under $20,000, permanently. Saves ~$32M/year in compliance costs. The legislated $20,000 threshold currently ends 30 June 2026.

Loss carry-back — permanent + 2-year lookback from 1 July 2026 (proposed)

Companies with turnover up to $1 billion would be able to carry losses back against tax paid in the prior 2 income years to claim a cash refund. Approximately 85,000 companies benefit (majority small business).

Cameo: Coffee Co Pty Ltd — café running 2025-26 at $40k profit, $10k tax (25% small biz rate). Purchases $19k coffee machine + $19k furniture + $17k heaters in 2026-27 using IAWO. Result: $15k tax loss, $0 tax for 2026-27. Carry-back: $3,750 cash refund (if the bill passes as introduced).

Loss refundability for start-ups — from 2028-29

Start-ups in their first 2 years of operation can get a refund for tax losses, capped at the value of FBT + PAYG withholding tax paid on employee wages. Up to 25,000 small start-ups eligible annually.

Research and Development Tax Incentive reform — from 1 July 2028

• Offset for experimental “core” R&D increased by 25-50%
• Intensity threshold reduced to 1.5%
• Higher-offset turnover threshold lifted to $50 million; refundability limited to firms operating <10 years
• Maximum expenditure cap increased to $200 million
• Minimum project expenditure threshold raised to $50,000 (smaller projects require Research Service Provider partnership)

Unlocks an estimated $400 million per year in additional R&D investment by young businesses.

Venture capital tax incentives — expanded from 1 July 2027

Changes to Early-Stage Venture Capital Limited Partnership (ESVCLP) and Venture Capital Limited Partnership (VCLP) programs to reflect modern company valuations.

Tax simplification for businesses

• PAYG monthly opt-in available from 1 July 2027
• Dynamic PAYG instalment calculations expanded
• ATO removes interest charges for businesses that get instalment variation wrong when using ATO-approved calculators
• 497 nuisance tariffs abolished from 1 July 2026 (saves $157M/year compliance)
• Free access to mandatory Australian standards (saves small electrical/plumbing/construction firms up to $1,600/year)

Electric Car Discount (FBT)

The 100% FBT exemption for electric cars transitions to a permanent 25% FBT discount (15% statutory formula rate).

• All EVs valued ≤$75,000 provided before 1 April 2029: continue with 100% discount (0% statutory rate)
• EVs valued >$75,000 (up to LCT fuel-efficient threshold) provided 1 April 2027 – 1 April 2029: 25% discount (15% statutory rate)
• From 1 April 2029: permanent 25% discount across all eligible electric cars
• 20% statutory rate continues for non-electric cars and EVs above LCT fuel-efficient threshold

Eligible cars retain whatever discount rate was in place when the arrangement commenced. Reportable fringe benefits continue to be determined at the 20% statutory rate or cost basis method.

Cost-of-living relief

Fuel excise reduction — 3 months from 1 April 2026

• Fuel excise + excise-equivalent customs duties reduced by 60.9 per cent (~32¢/litre cut for petrol and diesel)
• Heavy vehicle road user charge reduced from 32.4¢/litre to zero
• 5.7¢/litre of the cut returned through lower GST; states receive up to $400M to offset GST revenue reduction

Other cost-of-living measures

• $2 billion Local Infrastructure Fund for housing — supports up to 65,000 new homes over 10 years
• $5.9 billion to cut the cost of life-saving medicines (PBS)
• Increased Commonwealth Rent Assistance maxima (already legislated 2023+2024)
• Foreign property purchase ban extended to 30 June 2029

Anti-avoidance and compliance

Counter-Fraud Strategy Phase 2

$86.3 million over 4 years from 1 July 2026. ATO gains:

• Real-time fraud detection
• Live monitoring of fraudulent account access by tax agents
• Power to pause and waive tax debts of taxpayers victimised by tax intermediary fraud
• Garnishee powers expanded to include jointly held assets used to frustrate recovery
• Targeted exceptions to tax secrecy + enhanced information-gathering powers

Global Anti-Base Erosion Rules (Pillar Two)

Australia’s global minimum tax legislation amended to implement the OECD/G20 side-by-side package agreed 5 January 2026. Applies from 1 January 2026.

Indirect Tax Concession Scheme

ITCS access extended to European Union, Italy, Chile, and Tuvalu diplomatic and consular posts.

What did NOT change

• Tax-free threshold remains $18,200
• Top marginal rate stays at 45% (above $190,000)
• Superannuation Guarantee (SG) rate stays at 12% — legislated maximum reached
• FBT rate unchanged at 47%
• GST stays at 10%
• LITO unchanged ($700 max, $37,500 + $45,000 taper points)
• SAPTO unchanged (ATO will publish indexed values)
• LCT thresholds (ATO will publish CPI-indexed values)
• Car depreciation cost limit (ATO will publish CPI-indexed value)
• HELP/HECS repayment thresholds and rates (ATO will publish CPI-indexed values)
• PHI rebate tiers (re-indexed 1 April each year by Department of Health)
• Stage 3+ second-bracket rate falling 16% → 15% from 1 July 2026 was already legislated

Sources

• Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (Act No. 49 of 2026) and Income Tax Rates Amendment (Tax Reform No. 1) Act 2026 (Act No. 50 of 2026), royal assent 26 June 2026 — legislation.gov.au
• APH bill page — Treasury Laws Amendment (Tax Reform No. 1) Bill 2026
• Treasurer’s Budget Speech, 12 May 2026
• Treasury Budget Paper No. 1, Statement 4: Tax reform for workers, businesses and future generations
• Treasury Budget Paper No. 2, Receipt Measures — Treasury portfolio
• Treasury Budget Overview: Resilience and Reform
• Treasury fact sheet: Negative Gearing and Capital Gains Tax Reform
• Treasury fact sheet: New Tax Cuts for Australian Workers
• Treasury fact sheet: Minimum Tax on Discretionary Trusts
• Treasury fact sheet: Backing Small Businesses to Grow, Compete and Build Resilience

Related reading

• Budget 2026 Explained: Winners and Losers by Persona
• Negative Gearing Reform: 4-Bucket Explainer
• 50% CGT Discount Reform: Cost Base Indexation Explained
• How Budget 2026 Changes Your EOFY Plan
• Budget 2026 Hub — confirmed watchlist with calculator links
• Tax Changes 2026-27 Australia — salary-by-salary comparison