Federal Budget 12 May 2026: What to Watch for Your Tax — Preview (ATO Thresholds)

General information only. This is not tax or financial advice.

Editorial note: this page was written as a pre-Budget preview on 20 April 2026. The Budget has since been handed down and the core measures are now law — see Federal Budget 2026 Summary for what actually passed (CGT discount replaced by cost-base indexation + a 30% minimum tax from 1 July 2027, negative gearing quarantined for established property from 1 July 2027, Division 296 unchanged and commencing 1 July 2026 as scheduled; the permanent $20,000 IAWO was NOT part of the June Acts — it sits in the Tax Reform No. 2 Bill, still before Parliament as at July 2026). The speculative “what to watch” content below is kept as a historical record of what was unknown pre-Budget; treat any outcome described as “floated” or “to watch for” as superseded by the Summary page.

The 2026 Federal Budget is handed down at 7:30 pm AEST on Tuesday 12 May 2026 by Treasurer Jim Chalmers. It’s the first Budget of the new parliamentary year, and it lands in the middle of tax-planning season for millions of Australians filing their 2025-26 returns.

This page lists what to watch, what’s legislated regardless of the Budget, and where to look on Budget night for the numbers that matter. It will be updated live from ~9pm 12 May with confirmed figures.

Bookmark our Budget 2026 hub for the Budget-night dashboard.

What’s Already Legislated (Not Affected by the Budget)

These changes are locked in for 1 July 2026 regardless of what the Budget does:

The 2025-26 vs 2026-27 comparison page has the full rate table.

Six Things to Watch on Budget Night

1. Indexed thresholds (the boring but important ones)

Many thresholds move with CPI or wage growth. They’re usually announced in the Budget rather than the Mid-Year Economic and Fiscal Outlook (MYEFO). Watch for 2026-27 figures on:

• Medicare Levy Surcharge (MLS) tiers — currently $101k / $118k / $158k (singles)
• HELP/HECS minimum repayment threshold — currently $67,000; indexed to March CPI
• Superannuation concessional cap — currently $30,000
• Super non-concessional cap — currently $120,000
• Government co-contribution income bands — currently $45,400 / $60,400
• Medicare levy shade-in / LITO tapers

These feed straight into our income tax calculator, HELP repayment calculator, and MLS calculator.

2. Instant Asset Write-Off (IAWO)

The $20,000 IAWO for small businesses (< $10m aggregated turnover) has been extended year-by-year. The 2025-26 extension ends 30 June 2026. Watch for:

• Extension to 2026-27
• Threshold change (up to $30k or $50k has been floated)
• Aggregated turnover cap adjustment

3. Division 296 ($3M super tax)

Div 296 — the extra 15% tax on super balances above $3 million — is legislated to commence 1 July 2026 but has faced delays and amendment pressure. Watch for:

• Start date confirmation or deferral
• Whether unrealised gains stay in the tax base (controversial — industry pushback)
• Threshold indexation (currently non-indexed $3M)

Our Division 296 calculator models the current-law design; we’ll update it Budget night if announced changes land.

4. 50% CGT discount

The Senate Select Committee on the 50% CGT discount reported 17 March 2026 (see our analysis). The Treasurer didn’t rule out changes. Watch for:

• Rate change (50% → 33% has been modelled)
• Holding-period change (12 months → 5 years for property)
• Grandfathering rules for existing asset holders
• Targeted property vs broad-based change

5. Negative gearing changes

Like CGT discount, the Treasurer has declined to rule out negative gearing changes. Scenarios to watch:

• Cap on deductible losses against wage income
• Limit to new-build properties only (cf. 2019 Labor policy)
• Phased transition with grandfathering

If anything lands, our negative gearing calculator and property investment tools update the same night.

6. Energy and EV concessions

• FBT electric car exemption — current-law cut-off for plug-in hybrids was 1 April 2025. Watch for extension or tightening.
• Fuel-efficient vehicle LCT threshold — 2025-26 is $91,387; indexed to $91,661 for 2026-27 (ATO, 9 June 2026)
• New EV rebate schemes — possible given election-cycle timing

Budget Night Timeline

Will the Budget Affect My 2025-26 Tax Return?

Mostly no. The 2025-26 tax year ends 30 June 2026 — six weeks after Budget — and almost all Budget measures start from 1 July 2026 (i.e. the 2026-27 year). The main exception: measures explicitly backdated (rare outside natural-disaster relief) or measures that affect returns lodged after Budget night (e.g. new anti-avoidance measures).

Use our EOFY planner to make sure your 2025-26 position is locked in before Budget night changes the 2026-27 landscape.

Post-Budget Updates Schedule

Once the Budget is handed down, we update:

1. This page’s “Announced” section — what was confirmed, what surprised, what didn’t happen
2. Budget 2026 hub — itemised measure list with calculator links
3. Central tax-year config — every 2026-27 TODO in src/data/taxYears/2026-27.ts fills with announced figures (53 threshold placeholders)
4. 2025-26 vs 2026-27 changes page — comparison tables rebuild from the new config
5. Impacted calculators — MLS, HELP, super contribution, IAWO, Div 293/296, Medicare shade-in, LITO, car depreciation cost limit

Expected turnaround: publish-ready by 11pm AEST, 12 May 2026 — the Budget-night update checklist is documented internally so nothing is missed.

Useful Calculators and Scenarios

• 2025-26 vs 2026-27 tax changes comparison
• What’s changing in Australian tax 2026-27 — plain English guide
• Income tax calculator — reflects the legislated 15% bracket
• Medicare Levy Surcharge calculator — updates with new 2026-27 thresholds
• HELP/HECS repayment calculator
• Superannuation contribution calculator
• Division 293 / 296 calculator
• Instant Asset Write-Off calculator
• EOFY planner 2025-26

Sources

• Federal Budget 2026-27 — budget.gov.au
• Treasury Portfolio Budget Statements — treasury.gov.au
• ATO Tax Time 2026 — ato.gov.au