Federal Budget 2026-27: What’s changing now vs later

Federal Budget 2026-27 has been handed down, with a clear focus on cost‑of‑living relief, productivity and longer‑term reform. The key takeaway for most people is that several changes start from 1 July 2026, while bigger investor reforms are scheduled for 1 July 2027 and beyond.

Some of the most relevant measures are time‑staged, which means you generally have time to plan rather than rush decisions. Below we’ve broken down the changes into “Now” (from 1 July 2026) and “Later” (from 1 July 2027 and beyond).

1) Personal income tax: further tax cut from 1 July 2026
From 1 July 2026, the marginal tax rate on taxable income between $18,201 and $45,000 reduces from 16% to 15%. This delivers up to $268 per year in tax savings compared with current settings (depending on income).

2) A simpler work‑related deduction: $1,000 instant deduction
From the 2026–27 income year, workers can claim a $1,000 instant tax deduction for work‑related expenses without keeping receipts (and you can still claim more than $1,000 using the usual rules if you have records). This is designed to reduce admin at tax time and deliver additional cost‑of‑living relief.

3) Small business: $20,000 instant asset write‑off made permanent
For small businesses with turnover under $10 million, the Budget extends the $20,000 instant asset write‑off permanently from 1 July 2026. This has clear planning implications for equipment, technology and other eligible assets over the next few years.

1) Negative gearing: new builds only (from 1 July 2027)
From 1 July 2027, negative gearing for residential property will be limited to new builds. The Budget materials reported that properties held at 7:30 pm (AEST) on 12 May 2026 are exempt (grandfathered), so existing investors may not be affected for current holdings, but future purchases and strategy should be reviewed.

2) Capital gains tax (CGT): discount replaced (from 1 July 2027)
From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is reported to be replaced with cost base indexation and a 30% minimum tax rate. For clients planning major disposals or portfolio changes, the lead time is valuable for modelling and timing.

3) Further income tax cut from 1 July 2027
From 1 July 2027, the tax rate on the $18,201- $45,000 band is scheduled to reduce again from 15% to 14%, adding to the 1 July 2026 cut.

4) Working Australians Tax Offset (WATO) from 2027- 28
A new Working Australians Tax Offset of up to $250 is intended to apply from the 2027- 28 income year.

For many people, the best approach is clarity first:

1. If you’re an employee, understand what the 1 July 2026 changes mean for your likely tax position and deductions.
2. If you’re a business owner, the permanent $20,000 instant asset write‑off from 1 July 2026 may influence timing of eligible purchases and cashflow decisions.
3. If you’re a property investor (or planning to become one), the proposed 1 July 2027 changes to negative gearing and CGT make it worth reviewing your strategy well before those start dates.

Disclaimer

The information provided does not take into account your personal objectives, financial situation or needs. The budget measures are not yet legislated and may change before becoming law. However, we expect the Government will seek to implement these measures promptly.