2026–27 Federal Budget
What it means for individuals
The 2026–27 Federal Budget delivers some genuine wins for everyday Australians, but also introduces significant changes that will affect how you invest, how you plan, and how much tax you pay for years to come. Here is what you need to know.
Your tax bill is going down -
here's by how much
The Government has legislated a further round of personal income tax cuts. From 1 July 2026, the tax rate on income between $18,201 and $45,000 drops from 16% to 15%, with a further cut to 14% from 1 July 2027. On top of this, a new Working Australians Tax Offset of up to $250 applies from 2027–28 for all Australian workers, permanently increasing the effective tax-free threshold.
For someone on average earnings, the combined effect of all the Government's tax cuts could be worth up to $2,816 per year compared to 2024–25 settings. The cuts apply automatically — you don't need to do anything to receive them.
The $1,000 instant work-related deduction
From the 2026–27 income year, you can claim a $1,000 deduction for work-related expenses without keeping receipts. This simplifies tax time significantly for employees with straightforward deductions — the average benefit is around $205 for those who claim it.
If your actual work-related expenses exceed $1,000, you can still claim the higher amount — but you will need receipts and records as you do today. The instant deduction is a floor, not a ceiling, and for anyone with significant work-related costs it is worth making sure you're still capturing everything you're entitled to.
HELP and student loan repayments
The minimum repayment threshold for HELP and other study loans has increased to $67,000, and repayments now apply only to income earned above the threshold rather than total income. This provides modest relief for those with student debt, particularly those whose total income is close to the threshold.
GIC and SIC interest — no longer deductible
From 1 July 2025 (already in effect), you can no longer claim a tax deduction for General Interest Charge or Shortfall Interest Charge on outstanding ATO liabilities. If you have a tax debt you're managing through a payment arrangement, the interest on that debt is now a fully out-of-pocket cost. This makes it more important than ever to pay ATO liabilities on time — or to explore alternative financing options if you cannot.
This article contains general information only and does not constitute tax advice. Please see our disclaimer.
If you are a property developer or own property
Capital gains tax is changing — and it affects more than just property
This is the most significant change for individual investors since 1999.
From 1 July 2027, the existing 50% CGT discount for assets held more than 12 months will be replaced by cost-base indexation and a minimum 30% tax on real capital gains. This applies to all CGT assets held by individuals — shares, managed funds, investment properties, and more. It is not limited to property.
The key transitional protection is this: for assets you already hold, the 50% discount will apply to gains accrued up to 1 July 2027. Only gains arising after that date will be subject to the new rules. So the longer you hold an asset into the post-2027 period, the more of the gain falls under the new regime.
What this means in practice is that the timing of asset disposals now matters more than it has in decades. Strategies that relied on selling in low-income years to reduce the effective tax rate will be less effective under the 30% minimum. If you hold a significant investment portfolio or are considering selling assets in the next few years, this is worth discussing with us before the rules change.
Key date: 1 July 2027. Changes apply to gains accruing from this date.
Negative gearing — what's changing for property investors
From 1 July 2027, negative gearing on established residential properties will be restricted. If you purchase an established residential property after Budget night (12 May 2026), losses from that property will no longer be deductible against your salary or wage income. You can still offset losses against rental income from other properties, and carry unused losses forward to future years — but the ability to reduce your personal taxable income through property losses ends for new purchases.
Two important protections to understand:
Properties you already own, or where you had a contract in place before 7:30pm AEST on 12 May 2026, are fully exempt from these changes. Your existing arrangements are not affected.
Newly constructed residential properties are also exempt — investors in new builds can still negatively gear in the traditional sense. This is a deliberate policy choice to encourage investment in new housing supply.
Key date: 1 July 2027. Existing properties and new builds are exempt.
DISCLAIMER
The information contained on this page is general in nature and has been prepared without taking into account your personal objectives, financial situation, or needs. It is intended as an overview of key budget measures and should not be relied upon as tax advice.
Tax laws are complex and the measures described above are subject to legislation — some have not yet been enacted and may be subject to amendment or conditions not described here. The application of these measures to your circumstances will depend on your individual situation.
Before making any decisions based on the information on this page, you should seek independent advice from a registered tax agent or financial adviser. Atramentum Accounting & Consulting is a registered tax agent. We welcome you to contact us to discuss how these changes may apply to you.
Liability limited by a scheme approved under Professional Standards Legislation.
What should you do now?
If you have an investment portfolio, talk to us about the timing of any planned disposals before 1 July 2027. If you're considering buying an investment property, understand how the new negative gearing rules apply to your situation. If you have an ATO debt, factor in that the interest is no longer deductible.
The good news is that none of these changes are immediate — there is time to plan. But the planning needs to start now.