Australian Federal Budget 2026-27
Budget handed down Tuesday 12 May 2026 at 7:30 pm AEST by Treasurer Jim Chalmers. Every confirmed tax measure with its calculator impact, current vs announced thresholds, and links to the in-depth explainer for each reform.
Tuesday 12 May 2026 · 7:30 pm AEST — Budget handed down
Calculators updated with announced thresholds. See the Winners and Losers persona breakdown, the full measure-by-measure summary, or the pre-Budget watch-list for context.
Run your numbers
See your tax under 2025-26, 2026-27 and 2027-28 — Budget measures applied
The income tax calculator now lets you flip between three tax years. The 2026-27 view applies the legislated 15% second-marginal rate plus the new $1,000 instant tax deduction (opt-in). The 2027-28 view drops the bracket to 14% and auto-applies the $250 Working Australians Tax Offset.
Confirmed measures
9
Budget items with announced figures
No change
8
Items rolling over without Budget intervention
Already legislated
15%
Second marginal rate from 1 July 2026 (Stage 3+ phase 2)
Live source links — Budget night 12 May 2026
Authoritative sources for confirmed values. Always verify here before updating any figure on austax.tools.
Personal tax
Personal income tax cuts
Confirmed- Current:
- Stage 3+ phase 2 legislated (16%→15% from 1 July 2026)
- Expected:
- Possible additional cuts
- Announced:
- $1,000 Instant Tax Deduction from 2026-27 (6.2M workers, avg $205). $250 Working Australians Tax Offset from 2027-28 (13M workers, raises tax-free threshold to $19,985).
Medicare & MLS
Medicare Levy Surcharge tiers (singles)
No change- Current:
- $101,000 / $118,000 / $158,000
- Expected:
- CPI-indexed (≈2-3% lift)
- Announced:
- No Budget change announced; ATO publishes indexed values separately
Medicare Levy low-income thresholds
Confirmed- Current:
- Single $27,222 / Family $45,907 / Sr single $43,020 / Sr family $59,886 / +$4,216 per child
- Expected:
- CPI-indexed annually
- Announced:
- Raised 2.9% RETROACTIVE to 1 July 2025: Single $28,011 / Family $47,238 / Sr single $44,268 / Sr family $61,623 / +$4,338 per child
Capital gains
50% CGT discount
Confirmed- Current:
- 50% on assets held > 12 months
- Expected:
- Senate Inquiry reported 17 March; Treasurer has not ruled out changes
- Announced:
- REPLACED from 1 July 2027 with CPI cost base indexation + 30% minimum tax on real gains. Pre-1 July 2027 gain portion retains 50% discount (split treatment). Main residence + small biz CGT concessions UNCHANGED.
Property
Negative gearing
Confirmed- Current:
- Unrestricted deductibility of rental losses
- Expected:
- Possible cap, new-build limit, or grandfathering
- Announced:
- REFORMED from 1 July 2027 for established residential property. Properties held at 7:30 PM 12 May 2026 GRANDFATHERED. Established post-cutoff: losses only offset other residential property income. New builds retain full negative gearing.
Trusts
Discretionary trust taxation
Confirmed- Current:
- Trustee/beneficiary marginal rates
- Expected:
- Pre-Budget speculation on minimum rate
- Announced:
- 30% minimum tax from 1 July 2028. Excludes fixed trusts, widely-held trusts (most MITs), super (incl. SMSF), special disability, deceased estates, charitable. 3-year rollover relief from 1 July 2027.
Superannuation
Concessional contribution cap
No change- Current:
- $30,000
- Expected:
- Indexed by AWOTE (likely stays at $30k or rises to $32,500)
- Announced:
- No Budget change announced. ATO publishes AWOTE-indexed value separately.
Non-concessional contribution cap
No change- Current:
- $120,000
- Expected:
- 4× concessional cap (will move with concessional)
- Announced:
- Unchanged. = 4× concessional cap.
Division 296 ($3M super tax) start date
No change- Current:
- Legislated 1 July 2026
- Expected:
- Possible deferral or redesign (unrealised-gains treatment)
- Announced:
- Not modified by Budget 2026. Commences 1 July 2026 as legislated.
Government super co-contribution income bands
No change- Current:
- $45,400 lower / $60,400 upper
- Expected:
- Indexed annually with AWOTE
- Announced:
- No Budget change. ATO publishes indexed values.
Small business
Instant Asset Write-Off threshold
Confirmed- Current:
- $20,000 (ends 30 June 2026)
- Expected:
- Extension to 2026-27, possible increase to $30k-$50k
- Announced:
- PERMANENT $20,000 from 1 July 2026 (no longer a temporary measure). Saves ~$32M/yr in compliance costs.
Company loss carry-back
Confirmed- Current:
- Limited / phased out
- Expected:
- May be reintroduced for SMEs
- Announced:
- Permanent 2-year carry-back from 1 July 2026 for companies with turnover up to $1 billion. 85,000 companies benefit.
Education debt
HELP/HECS minimum repayment threshold
No change- Current:
- $67,000
- Expected:
- Indexed by March quarter CPI (≈$69,000)
- Announced:
- No Budget change announced; ATO will publish CPI-indexed value mid-year
Fringe benefits
FBT electric car exemption
Confirmed- Current:
- Full EV only (PHEV cut-off was 1 April 2025)
- Expected:
- Possible PHEV reinstatement or tightening
- Announced:
- PERMANENT 25% FBT discount (15% statutory rate) from 1 Apr 2029 for EVs up to fuel-efficient LCT threshold. EVs ≤$75k retain 100% discount till 1 Apr 2029. EVs >$75k but ≤fuel-efficient LCT threshold get NEW 25% discount from 1 Apr 2027. Above LCT threshold: no discount.
Vehicles
Fuel-efficient vehicle LCT threshold
No change- Current:
- $91,387 (2025-26)
- Expected:
- CPI-indexed uplift
- Announced:
- No Budget change. ATO will publish CPI-indexed value.
Fuel
Fuel excise reduction
Confirmed- Current:
- Full excise applies
- Expected:
- Possible temporary cut due to oil shock
- Announced:
- 60.9% (≈32¢/L) cut on excise + customs duty for 3 months from 1 April 2026. Heavy vehicle road user charge cut to ZERO.
Low-income offsets
LITO taper thresholds
No change- Current:
- $700 max, tapers $37,500 → $66,667
- Expected:
- Possibly reviewed given bracket change
- Announced:
- No change. LITO unchanged at $700 max with same taper points.
Effective-date timeline
- 7:30 pm AEST · 12 May 2026 — Budget handed down. Negative gearing grandfathering cutoff: properties held at this moment retain current rules forever.
- 1 July 2026 (FY 2026-27) — Second marginal rate drops 16% → 15%. $1,000 Instant Tax Deduction available. Permanent $20,000 IAWO. Loss carry-back commences for companies up to $1B turnover. Medicare levy thresholds (raised 2.9%) apply retroactively to 1 July 2025.
- 1 April 2027 — FBT EV new 25% discount commences for cars above $75,000 up to fuel-efficient LCT threshold.
- 1 July 2027 (FY 2027-28) — Second marginal rate drops 15% → 14%. $250 Working Australians Tax Offset commences. 50% CGT discount replaced by cost base indexation + 30% minimum tax. Negative gearing reform takes effect (transitional Bucket B properties lose salary-offsetting). Trust 3-year rollover relief window opens. VC investee cap uplift.
- 1 July 2028 (FY 2028-29) — 30% minimum tax on discretionary trusts commences. Start-up loss refundability begins. R&D Tax Incentive reform takes effect (+4.5 pp core offset, intensity 1.5%, $50M refundable threshold, 10-year refundability cap).
- 1 April 2029 — FBT EV 25% discount applies to all eligible EVs ≤ fuel-efficient LCT threshold.
- 30 June 2030 — Discretionary trust rollover relief window closes.
In-depth coverage
- Budget 2026-27 Explained — Winners and Losers by Persona (flagship)
- Federal Budget 2026 Summary — every announced measure
- $1,000 Instant Tax Deduction Explained
- $250 Working Australians Tax Offset Explained
- 50% CGT Discount Reform — Cost Base Indexation Explained
- Negative Gearing Reform — 4-Bucket Explainer by Purchase Date
- 30% Minimum Tax on Discretionary Trusts
- Budget 2026 and Your EOFY Plan — Why 30 June 2027 Is the Bigger Date
- Resilience and Reform — economic framework, fiscal numbers, productivity pillars
- Backing Small Business — IAWO, loss carry-back, start-up refundability
- FBT Electric Car Discount Reform — phased transition to 1 April 2029
- Medicare Levy low-income thresholds — 2.9% retroactive uplift
- 50% CGT Discount Senate Inquiry — pre-Budget context and confirmed outcome
- Pre-Budget preview — original watch-list (historical)
- What's changing in Australian tax 2026-27 — plain-English guide
- 2025-26 vs 2026-27 Australian tax changes
- All tax insights
Frequently asked questions
When was the 2026-27 Federal Budget handed down?
The Budget was handed down at 7:30 pm AEST on Tuesday 12 May 2026 by Treasurer Jim Chalmers. Budget papers, fact sheets, and the Treasurer's speech are available at budget.gov.au.
What is the $1,000 Instant Tax Deduction and when can I claim it?
From the 2026-27 income year, 6.2 million workers can claim up to $1,000 of work-related expenses without keeping receipts. The deduction is applied automatically when you lodge your 2026-27 tax return (from 1 July 2027 onwards). Average tax saving: $205.
When does the $250 Working Australians Tax Offset start?
The $250 WATO commences in the 2027-28 income year (from 1 July 2027). It is a permanent annual tax offset for 13 million Australian workers, including sole traders, and raises the effective tax-free threshold to $19,985 ($24,985 with LITO).
How does the negative gearing reform affect existing investors?
Properties held at 7:30 PM AEST 12 May 2026 are grandfathered forever — they continue under the current rules. Properties bought between 12 May 2026 7:30 PM and 30 June 2027 can negatively gear against salary only until 30 June 2027, after which losses ring-fence to other residential property income. From 1 July 2027, established post-cutoff purchases are wholly ring-fenced. New builds purchased from a builder retain full negative gearing.
Does the 50% CGT discount disappear from 1 July 2027?
Yes for new disposals: the 50% discount is replaced by CPI cost base indexation plus a 30% minimum tax on real gains. For assets owned at 1 July 2027, the gain is split — the pre-1 July 2027 portion keeps the 50% discount, the post-1 July 2027 portion uses the new rules. Main residence, small business CGT concessions, and the 60% affordable housing discount are retained unchanged.
Will the Budget affect my 2025-26 tax return?
Yes, but lightly. The Medicare levy low-income thresholds were raised 2.9% retroactive to 1 July 2025, which affects 2025-26 lodgement for households just above the old thresholds. Most other measures start from 1 July 2026 or later. If you're an existing negatively-geared property investor, your 2025-26 return is unchanged and your future returns remain grandfathered.