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Budget 2026 Tax Changes: What It Means For You

The 2026-27 Federal Budget is the most significant tax reform package in over 25 years. Here's every change, when it starts, and how to estimate the impact on your pay or investments.

Updated May 2026Budget Delivered 12 May 2026Calculators Included

At-a-Glance Summary

  • 15% bracket replaces 16% on $18,201–$45,000 from 1 July 2026 (saves up to $268)
  • Working Australians Tax Offset (WATO) up to $250 for 13M workers from 1 July 2026
  • $1,000 instant work-expense deduction from 2026-27 — no receipts needed
  • CGT 50% discount replaced by cost base indexation + 30% minimum tax (from 1 July 2027)
  • Negative gearing limited to new builds (from 1 July 2027, existing investments grandfathered)
  • Division 296 — extra 15% tax on super earnings over $3M balance (from 1 July 2026, now law)
  • Discretionary trusts face a 30% minimum tax (from 1 July 2028)
  • Super Guarantee rises to 12% from 1 July 2026 (already legislated)

Timeline: When does each change start?

Start DateChangeStatus
1 Jul 202615% bracket on $18,201–$45,000Announced
1 Jul 2026Working Australians Tax Offset (up to $250)Announced
1 Jul 2026Super Guarantee rises to 12%Law
1 Jul 2026Division 296: extra 15% on super earnings over $3MLaw (Mar 2026)
2026-27$1,000 instant work-related deductionAnnounced
1 Jul 2027CGT 50% discount → indexation + 30% min taxAnnounced
1 Jul 2027Negative gearing limited to new buildsAnnounced
1 Jul 202830% minimum tax on discretionary trustsAnnounced

What "Announced" means: The change was confirmed in the Budget speech and Budget papers but still requires legislation. Existing arrangements are grandfathered for CGT and negative gearing if the asset was acquired before 7:30pm AEST on 12 May 2026.

Changes for workers

Changes for property investors

Changes for superannuation

Changes for small business and trusts

Permanent $20,000 instant asset write-off

From 1 July 2026, small businesses with turnover up to $10 million can immediately deduct eligible assets costing under $20,000. This was previously extended year-by-year — now permanent.

Loss carryback for small companies

From 2026-27, eligible companies that make a loss can use it to claim a refund against tax paid in the previous two income years. Around 85,000 mostly small companies are expected to benefit.

30% minimum tax on discretionary trusts

From 1 July 2028, a 30% minimum tax will apply to the taxable income of discretionary trusts (often called family trusts). This closes a long-standing planning gap where distributions could attract lower marginal rates.

Calculators to estimate your impact

Frequently Asked Questions

When were the Budget 2026 tax changes announced?

The 2026-27 Federal Budget was delivered by Treasurer Jim Chalmers on 12 May 2026. It is widely described as the most significant tax reform package in more than 25 years.

Which changes take effect from 1 July 2026?

From 1 July 2026, the second tax bracket drops from 16% to 15% (applies to income between $18,201 and $45,000), the Working Australians Tax Offset (up to $250) begins, the Superannuation Guarantee rises to 12%, and Division 296 (the additional 15% tax on super earnings on balances over $3 million) commences.

Which changes do not start until 2027 or later?

The replacement of the 50% CGT discount with cost base indexation plus a 30% minimum tax, and the negative gearing restriction to new builds only, both start from 1 July 2027. The 30% minimum tax on discretionary trusts starts from 1 July 2028.

Is the $1,000 instant deduction available now?

The $1,000 instant work-related expense deduction applies from the 2026-27 income year. You can claim it on the tax return you lodge for the year ending 30 June 2027.

Are the CGT and negative gearing changes law yet?

No. They were announced in the Budget on 12 May 2026 but require legislation to pass Parliament. The Government has confirmed that arrangements remain unchanged for all existing investments made before 7:30pm AEST on 12 May 2026.

How much will the average worker save under the new 15% bracket?

A worker earning $45,000 or more saves $268 per year from the 16%-to-15% rate cut on the $18,201-$45,000 bracket. Lower-income workers save proportionally less. Up to 13 million workers also benefit from the Working Australians Tax Offset of up to $250 per year.

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This guide summarises the 2026-27 Federal Budget tax announcements. Most measures require legislation to take effect and final rules may differ. This is general information, not financial or tax advice. Consult a registered tax agent for advice on your circumstances.

Last updated: 25 May 2026