Federal Budget: What Actually Changes for You

The Federal Budget was handed down on 12 May 2026, and it contains some of the biggest tax changes Australia has seen in decades. Some of it is good news. Some of it will require decisions. And some of it depends on when you act.

One important note upfront: a number of these changes have been announced but still need to pass through parliament, before they officially become law. We will keep you updated as that happens.

You Are Getting a Tax Cut – Here Is How Much

From 1 July 2026, Australians who earn between $18,201 and $45,000 will pay a slightly lower rate of tax on that portion of their income. The rate drops from 16% to 15%.

Most people will save up to $268 over the year, roughly $5 a week. It is not life-changing on its own, but it is real money back in your pocket, and it applies automatically. 

There is more to come. From 1 July 2027, that same rate drops again to 14%, increasing the saving to around $536 a year. And from 2027–28, a new annual tax offset of up to $250 will also apply to most workers. Put it all together and someone on average wages could be keeping up to $2,816 more per year from 2027–28 than they do today.

A New $1,000 Tax Deduction — No Receipts Needed

From this financial year (2026–27), workers will be able to automatically claim up to $1,000 in work-related expenses at tax time, without needing to keep receipts.

Think of it like a simplified way to claim things you spend money on for work: uniforms, tools, training, home office costs. Instead of tracking every receipt, you can claim up to $1,000 as a flat deduction. The average saving for eligible workers is around $205.

If your actual work expenses are higher than $1,000, you can still claim the full amount, but you will need receipts to support the larger claim, just as before.

Selling an Investment? The Rules Are Changing in 2027

This one is important for anyone who owns investment property, shares, or other assets outside of their home.

Currently, if you sell an investment you have owned for more than 12 months, you only pay tax on half of the profit. This is known as the 50% capital gains discount, and it has been in place since 1999.

From 1 July 2027, that discount is being replaced with a new system. Instead of automatically halving your taxable profit, the new rules will only tax you on the portion of your gain that exceeds inflation. There is also a minimum tax rate of 30% that applies to any remaining gain.

What does this mean in practice? For assets that grow strongly in real terms, you could end up paying more tax under the new system than you would have under the old one. For assets that barely kept pace with inflation, the outcome may be similar or even better.

The key detail is timing: these new rules only apply to gains made after 1 July 2027. If you sell before that date, the current rules still apply in full. If you hold an asset across that date, the gain is split, with the portion earned before 2027 still treated under the old rules.

If you are sitting on an investment with a large profit and you have been thinking about selling, the timing of that decision now matters more than it did before. This is worth a conversation with your advisor sooner rather than later.

Investment Property: Big Changes for New Buyers

If you buy an established property from now on, any rental losses can only be used to offset income from other investment properties or future property profits. You can carry those losses forward, they are not gone forever, but you can no longer use them to reduce your wage or salary tax each year.

New homes are treated differently. If you buy a newly built property, the current tax benefits remain fully available. This is deliberate, as the government wants to encourage investment in new housing, not existing stock.

If you purchased an established investment property after Budget night, speak with your advisor to understand how your tax position changes from 2027. If you are considering buying, make sure you factor this in before you sign anything.

Small Business: Good News on Equipment Purchases

If you run a small business with turnover under $10 million, you will be pleased to know that the $20,000 instant asset write-off has been made permanent.

This means: if you buy a piece of equipment, machinery, or other business asset for less than $20,000, you can deduct the full cost in the same year you buy it, rather than spreading the deduction over several years. This has been available on and off for the past few years, but it has always been subject to annual renewal. Making it permanent gives small businesses the certainty to plan properly.

Family Trusts: A Major Change Is Coming

If your business or investments are structured through a family discretionary trust, one of the most significant announcements in this Budget directly affects you. This is covered in detail in another article, but the short version is this: from 1 July 2028, trusts will be required to pay a minimum tax of 30% on their income. The ability to split income among family members on lower tax rates (which has been a key benefit of the trust structure) will be significantly reduced.

There is a window from July 2027 to restructure without tax penalties, if needed. We strongly recommend getting advice well before that window opens.

The 2026–27 Budget affects almost every client we work with in some way. Whether it is the tax cuts, an investment property, a business purchase, or a family trust, there are decisions worth reviewing now. If you would like to talk through how any of these changes apply to your situation, we are here to help. Call 1800 618 800 or email admin@simmonslivingstone.com.au.