2026-27 Federal Budget
The 2026-27 Federal Budget: What's Actually Changing on Tax
Posted 12 May 2026
Well, Jim Chalmers handed down the Budget tonight, and unlike a lot of Budgets that turn out to be a bunch of fluff and reshuffled spending, this one actually has some meaty tax stuff in it. Whether you're a wage earner, a small business owner, or sitting on an investment property, there's something in here that'll touch your tax return over the next few years.
Here's the plain-English rundown of what's changing and when.
A tax cut for every worker (yes, even you)
The headline grab is more personal income tax relief. From 1 July 2026, every Aussie taxpayer cops a tax cut of up to $268. Then from 1 July 2027 it doubles to up to $536 a year compared to where rates sat in 2024-25. The lowest marginal rate is dropping from 16% down to 14% by mid-2027.
It's not life-changing money, but it's not nothing either — and it stacks on top of the Stage 3 cuts that already kicked in last year.
The $1,000 "I can't be stuffed keeping receipts" deduction
This one's actually pretty cool. From the 2026-27 financial year, you can claim a flat $1,000 instant deduction against your work income without producing a single receipt. No shoebox of crumpled servo dockets. No arguing with your accountant about whether that pair of shoes counts.
The ATO reckons about 6.2 million workers will use it, with an average benefit of around $205. If your actual work-related deductions add up to more than a grand, you obviously still claim those instead — but for everyone who normally scrapes together $400 of bits and pieces, this is a straight upgrade.
The Working Australians Tax Offset (WATO)
From the 2027-28 income year, there's a new $250 permanent tax offset for people who earn employment income. It just automatically reduces your tax bill — you don't have to do anything to claim it.
Add it all up — the rate cuts, the WATO and the $1,000 instant deduction — and Treasury says a worker on average earnings is up to $2,816 better off from 2027-28.
Property investors: the vibe has shifted
This is where things get spicy. Two big changes coming on 1 July 2027:
Negative gearing is being wound back. Going forward, you'll only be able to negatively gear new builds. The good news for anyone already in the game: if you owned the property on 12 May 2026 (today), you're grandfathered in. Existing investors won't get pinged.
The 50% CGT discount is gone. It's being replaced with a discount tied to inflation, plus a minimum 30% tax on capital gains from property. So the days of buying an established rental, holding it five years, and getting half your gain tax-free are numbered.
If you've been thinking about getting into the property game and your strategy was "negatively gear an old Federation cottage in Marrickville", you'll want a rethink. If your plan is "build something new and hold long-term", you're more or less fine.
Small business: a couple of decent wins
Two solid changes here:
The $20,000 instant asset write-off is now permanent. No more annual "will they / won't they extend it" drama. Buy the ute, claim the ute.
A new loss carry-back refund — if your company makes a loss in 2026-27, you can use it to claw back tax you paid in the previous two years. Up to 85,000 mostly small companies are expected to use this, and it's a proper cash flow lifesaver when business slows down.
Trusts in the crosshairs
From 1 July 2028, a minimum 30% tax will apply to distributions from discretionary (family) trusts, with some exceptions. If you've been using a trust to stream income to a low-tax beneficiary, the strategy is about to get a lot less effective. Worth a chat with your accountant well before that date if this is you.
So what should you actually do?
Honestly, for most people the answer is "not much, yet". The personal tax cuts and instant deduction just happen automatically when you lodge your return. But if you're a property investor, run a small business, or use a family trust, this is the year to actually sit down with your accountant and map out a plan — there's a real window between now and 2027-28 where some restructuring might be worth doing.
And as always, this is general info, not advice. Your situation is your situation. Get a professional to look at your numbers before you make any big moves.