The government outlined a range of measures in its 2026 Federal Budget on 12 May, with housing affordability, cost-of-living relief and tax reform at the forefront.
Here are some of the key changes, and what they could mean for everyday Australians.
$250 tax offset for working Australians
Eligible taxpayers will receive a $250 tax break through a “Working Australians Tax Offset”, a permanent tax offset available to all Australians who earn income and pay tax, including sole traders.
What does it mean for households?
The offset will reduce the amount of tax paid for the financial year, allowing Australians to keep more of what they earn and helping to ease pressure from everyday living costs.
When can you claim it?
The offset will apply to income earned from 1 July 2027 and be automatically applied to tax returns from 2028.
$1,000 no-receipt tax deduction
Eligible taxpayers can claim up to $1,000 in work-related expenses without needing to provide receipts, instead using a flat deduction when lodging their tax return.
Receipts will still be needed to claim for amounts over $1,000.
What does it mean for households?
The change makes tax returns simpler by removing the need to track and store receipts for smaller expenses.
It can also reduce taxable income, which could save some households hundreds of dollars depending on their income and tax bracket.
When can you claim it?
The deduction applies from 1 July 2026, so can be claimed on tax returns from 2027.
FBT exemption changes for EVs
The fringe benefits tax (FBT) exemption for EVs purchased through a novated lease will be wound back from April 2027, with the full FBT exemption only applying to electric vehicles priced at $75,000 or less. EVs above $75,000 but below the luxury car tax threshold receive a reduced 25% discount.
From April 2029, all eligible electric vehicles under the luxury car tax threshold receive a 25% discount, replacing the current full exemption.
What does it mean for households?
The changes are expected to increase the cost of owning an EV, particularly those considering higher-priced models. This may reduce the financial advantage of EVs compared to petrol or diesel vehicles for some households.
For households looking to purchase an EV, timing may also become more important, with stronger incentives to lock in to a novated lease before the first changes are introduced in April 2027.
When do the changes take effect?
The changes begin from April 2027, with further adjustments taking effect from April 2029.
Negative gearing changes
Negative gearing tax concessions, which allow investment property owners to deduct losses from their taxable income, will now only apply to newly built properties, with the government aiming to encourage investment in new housing supply rather than existing homes.
Investors who held a negatively geared property before Tuesday's budget announcement will keep their current tax arrangements under “grandfathering” provisions, meaning the changes will not apply retrospectively.
What does it mean for households?
The changes are designed to improve housing affordability and accessibility by reducing competition between investors and first-home buyers.
However, some property industry groups warn the changes could increase rents over time if investors pull back from the market or pass on higher ownership costs to tenants.
When do the changes take effect?
The new restrictions take effect from 1 July 2027 and apply to established residential investment properties purchased after the announcement.
Capital gains tax (CGT) reform
CGT is paid on profit made when selling an asset such as shares or an investment property. Under the current system, investors receive a 50% discount if they have owned the asset for more than 12 months.
The government will remove this 50% discount for investment properties and shares purchased after the change takes effect. It will instead be replaced with inflation-adjusted indexation as well as a minimum 30% tax rate on capital gains from July 2027.
It's important to note with the CGT changes that new builds will be exempt, retaining the ability to use the 50% discount that already exists. The family home remains exempt from CGT, and superannuation funds will not be affected.
What does it mean for households?
As with negative gearing changes, the government believes the change will improve housing affordability and availability for younger Australians and first-time buyers.
However, it could also reduce the supply of rental properties and push up rents in the process.
When do the changes take effect?
Assets purchased after budget night will continue under the existing CGT discount rules until 1 July 2027, after which the new system will apply.
Instant asset write-off made permanent
The $20,000 instant asset write-off has been made permanent for small businesses, allowing eligible business owners to immediately deduct the cost of assets such as tools, laptops and equipment, rather than spreading the deduction over time.
The current scheme was due to end on 30 June 2026, after which the threshold would have dropped back to $1,000.
What does it mean for households?
While this measure is targeted at small businesses, it can also support people running home-based businesses or working from home by improving cash flow, allowing an immediate tax deduction for eligible items costing under $20,000.
When does it start?
The permanent $20,000 threshold will apply from 1 July 2026.
New tax rules for trusts
A minimum 30% tax rate has been introduced on discretionary trust distributions as part of efforts to limit tax minimisation strategies.
Discretionary family trusts are arrangements where income can be distributed between beneficiaries at the discretion of the person managing the trust, which can reduce overall tax paid by spreading income across multiple people in lower tax brackets.
The new minimum rate is designed to limit this type of income splitting and bring trust taxation closer in line with company tax rates.
What does it mean for households?
For households using family trusts, the change may reduce the ability to lower tax by distributing income across different beneficiaries. This could result in higher tax payable for some families who rely on trusts for managing investment or business income.
For Australians not using trusts, there is no direct impact, although the reform is aimed at increasing overall tax fairness in the system.
When does it start?
The new minimum tax rate applies from 1 July 2028.
Health insurance rebate reduction for over 65s
The higher private health insurance rebate for Australians aged over 65 has been removed, with all age groups now receiving a maximum 24% rebate depending on their income tier.
What does it mean for households?
More than 3 million Australians aged over 65 are expected to be affected. For many households, the change could increase seniors' private health insurance costs by several hundred dollars a year.
There are concerns this may lead some people to downgrade or drop private cover altogether, which could increase pressure on the public health system if more people rely on Medicare instead.
When does it take effect?
The rebate changes take effect from April 2027.