The 16% tax rate continues For taxable income from A$18,201 to A$45,000
Federal Budget 2026-27: What Changes and When?
The Federal Budget was delivered on 12 May 2026.
Many of the headline tax changes do not apply to the 2026 tax return. To make the timing clear:
Income year | Period | Key position |
|---|---|---|
FY2026 | 1 Jul 2025 - 30 Jun 2026 | Current rules largely continue |
FY2027 | 1 Jul 2026 - 30 Jun 2027 | Personal tax cut and new A$1,000 work-expense deduction |
FY2028 | 1 Jul 2027 - 30 Jun 2028 | Major negative-gearing and CGT reforms commence |
FY2026 - 2025–26 Tax Return
What applies now?
For tax returns covering 1 July 2025 to 30 June 2026:
Important
The Budget’s new negative-gearing and CGT rules do not change your FY2026 tax return.
FY2027 - 2026–27 Income Year
From 1 July 2026:
Personal tax rate
The tax rate on taxable income between A$18,201 and A$45,000 reduces from:
16% → 15%
The other main tax brackets remain unchanged.
A$1,000 standard work-related deduction
From FY2027, eligible Australian resident workers can receive a standard work-related deduction of up to A$1,000 without keeping receipts for the expenses covered by the standard deduction.
If your eligible actual work-related deductions are more than A$1,000, you can continue claiming the actual amount under the normal rules, with the required records.
Certain deductions remain separate, including eligible:
donations;
investment expenses;
superannuation contributions;
union and professional association fees; and
other deductions specifically excluded from the standard deduction.
This starts in FY2027. It cannot be used in the FY2026 return.
Negative gearing - still unchanged during FY2027
Existing negative-gearing rules continue until 30 June 2027.
This means an eligible rental property loss can continue to reduce other assessable income, such as salary and wages, during FY2027 under the existing rules.
The new restriction does not commence until 1 July 2027.
CGT - existing rules still apply during FY2027
The existing CGT rules also continue through 30 June 2027.
Eligible individuals and trusts can generally continue to access the existing 50% CGT discount where the asset has been held for at least 12 months and the other conditions are satisfied.
Small business
The Budget proposes to make the A$20,000 instant asset write-off permanent for eligible small businesses from 1 July 2026.
It also proposes a permanent two-year company loss carry-back from FY2027.
Legislative status
As at 9 August 2026, these business measures are contained in the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 and have not yet passed Parliament.
We will update this page when the legislation is enacted.
FY2028 - Major Property and CGT Changes
FY2028 runs from 1 July 2027 to 30 June 2028.
This is when the major negative-gearing and CGT reforms begin.
Negative Gearing from 1 July 2027
Existing properties acquired before Bedget night
Residential properties acquired before:
7:30 pm AEST on 12 May 2026
are generally grandfathered.
Subject to the legislation and the taxpayer’s circumstances, these properties can continue to use the existing negative-gearing treatment after 1 July 2027.
In simple terms
Bought before the Budget cut-off → existing negative-gearing treatment generally continues.
New residential properties
Qualifying new residential dwellings can also continue to be negatively geared after 1 July 2027, subject to the legislative conditions.
In simple terms
Qualifying new build → negative gearing can continue.
Established property acquired after Budget night
If you acquired an established residential property after 7:30 pm AEST on 12 May 2026, the position changes from 1 July 2027.
You can still deduct eligible rental expenses against residential property income.
However, if those expenses create an excess residential property loss: the excess generally cannot be deducted against salary, wages or other non-residential income.
The unused amount can generally be carried forward and used against qualifying residential property income or gains in later years.
Simple example
From FY2028:
Rental income: A$30,000
Allowable rental expenses: A$42,000
Rental loss: A$12,000
For an affected established property purchased after Budget night:
A$30,000 of expenses can offset the A$30,000 rental income;
the remaining A$12,000 cannot generally reduce salary income;
the A$12,000 is instead quarantined for future eligible residential property income or gains.
Capital Gains Tax from 1 July 2027
The CGT reform also begins in FY2028.
Before 1 July 2027
The existing rules continue.
Eligible individuals and trusts can generally use the 50% CGT discount for qualifying assets held for at least 12 months.
From 1 July 2027
For affected gains accruing from 1 July 2027:
the existing 50% CGT discount is generally replaced with cost-base indexation for inflation; and
a minimum 30% tax mechanism applies to relevant real capital gains, subject to the legislation and applicable exemptions.
Very important - this is not retrospective
The new rules generally apply to the portion of a gain that accrues from 1 July 2027.
Value built up before that date remains subject to the transitional rules preserving the pre-1 July 2027 component.
Therefore, owning an investment before 1 July 2027 does not mean the entire future capital gain suddenly falls under the new system.
Special rule for qualifying new residential builds
Investors in qualifying new residential dwellings can generally choose between:
the existing 50% CGT discount regime; or
the new inflation-indexation and minimum-tax regime.
Professional advice should be obtained before making that choice.
FY2028 Personal Tax Changes
From 1 July 2027:
the tax rate on taxable income between A$18,201 and A$45,000 reduces again from 15% to 14%; and
eligible working Australians may receive the new Working Australians Tax Offset of up to A$250.
The A$1,000 standard work-related deduction also continues.
Quick Summary
Measure | FY2026 | FY2027 | FY2028 |
|---|---|---|---|
A$18,201–A$45,000 tax rate | 16% | 15% | 14% |
A$1,000 standard work deduction | ❌ | ✅ | ✅ |
Working Australians Tax Offset | ❌ | ❌ | Up to A$250 |
Existing negative-gearing rules | ✅ | ✅ | Changed for some properties |
Property bought before 12 May 2026 cut-off | Existing | Existing | Gradfathered |
Qualifying new-build negative gearing | Existing | Existing | Continues |
Established property bought after Budget cut-off | Existing | Existing | Loss quarantining applies |
Existing 50% CGT discount | ✅ | ✅ | Reformed for post-01 uly 2027 gains |
New CGT indexation/minimum-tax rules | ❌ | ❌ | From 01 July 2027 |
What Property Investors Should Do Now
If you own or are purchasing residential investment property, retain:
signed purchase contract;
exact contract date and time;
settlement statement;
evidence showing whether the dwelling was new or established;
loan and interest records;
capital improvement invoices;
depreciation and capital works schedules; and
complete CGT cost-base records.
The 12 May 2026 Budget-night acquisition cut-off may remain important for as long as the property is owned.
For property held through trusts, companies, partnerships or superannuation funds, or where ownership is being transferred between related parties, obtain advice before restructuring.
Important
This page is a general summary only. Different commencement dates and transitional rules apply to different Budget measures.
In particular
FY2026 and FY2027 retain the existing negative-gearing and CGT rules.
The major property reforms commence from FY2028 - 1 July 2027.