Federal Budget 2026: What it means for families, employees, business owners, retirees and investors

Last night Jim Chalmers handed down the most significant Federal Budget in two decades.

Negative gearing. Capital gains tax. Family trusts. The three sacred cows of Australian tax planning all got touched.

Here is a breakdown of what this Budget means for families, employees, business owners, retirees and investors, plus the changes that affect everyone. Jump to the section that matters most to you below, or read the lot.

What’s in this article

The three big ones

Negative gearing. From 1 July 2027, you can only negatively gear new builds. Established (existing) properties owned before 7:30pm AEST on 12 May 2026 are fully grandfathered, meaning you can keep negatively gearing them indefinitely. Established properties bought between Budget night and 30 June 2027 can be negatively geared during that window only, then lose the benefit from 1 July 2027 onwards. New builds keep negative gearing both before and after July 2027.

Capital Gains Tax. The 50% discount is being replaced with cost base indexation and a 30% minimum tax rate from 1 July 2027. These changes apply to all CGT assets, including pre-1985 assets held by individuals, trusts and partnerships. No changes have been flagged for the taxation of CGT assets held by superannuation funds, including SMSF’s.

Discretionary trusts. A minimum 30% tax will apply to taxable income retained in family trusts from 1 July 2028. The tax will be paid by the trustee and beneficiaries will receive a credit for the tax payable. 

These are significant shifts. We won’t sugar-coat that. But there’s also an 18-month runway to plan, restructure where needed, and make decisions with eyes open.

What it means for families

If you’ve already been making decisions based on family tax planning, three things stand out.

Personal tax cuts are already locked in. The 16% rate drops to 15% from 1 July 2026, then to 14% from 1 July 2027. That’s not new (it passed in March 2025) but it’s still landing.

A new $250 Working Australians Tax Offset kicks in from the 2027-28 income year. It lifts your effective tax-free threshold to around $19,985 (or up to $24,985 if you qualify for the Low Income Tax Offset).

The Medicare levy low-income thresholds went up from 1 July 2025. Singles can now earn up to $28,011 before paying any Medicare levy. Families, up to $47,238.

If you use a family discretionary trust to split income between household members, the new 30% minimum trust tax is the one to watch. It doesn’t start until 1 July 2028, and there’s a three-year rollover window from July 2027 to restructure without triggering CGT.

What it means for employees

The $1,000 instant tax deduction. If your work-related expenses are under $1,000 a year, you can claim a flat $1,000 from the 2026-27 income year without keeping receipts or itemising. If your expenses are higher, claim them the usual way. Donations, union fees and professional memberships sit on top.

Effective tax-free threshold lifts. Between the personal tax rate cuts and the new $250 Working Australians Tax Offset, the threshold rises to around $19,985 for workers.

Electric vehicle FBT changes. If you’re salary-packaging an EV under $75,000, the 100% FBT discount stays in place until 1 April 2029. After that, it transitions to a permanent 25% discount across all EVs valued up to the fuel-efficient luxury car tax threshold.

What it means for business owners

This one’s a mixed bag.

The $20,000 instant asset write-off becomes permanent from 1 July 2026 for businesses with turnover up to $10 million. Buy a piece of equipment under $20k, deduct it in the same year. No more wondering whether the threshold gets extended.

Loss carry-back returns. Companies with global turnover under $1 billion will be able to carry revenue losses back and offset them against tax paid up to two years earlier, from 1 July 2026. Useful if you’re in a growth-then-contract cycle, or investing heavily in a year that wipes out profit.

Start-up loss refundability. Start-ups under $10 million turnover can turn early-year tax losses into a refundable offset (limited to FBT and withholding tax paid on Australian wages) from 1 July 2028.

Monthly PAYG instalments become an opt-in option from 1 July 2027. If your business income is lumpy, this lets your tax instalments track reality instead of last year’s numbers.

The big one. Discretionary trusts. From 1 July 2028, trustees will pay a minimum 30% tax on the taxable income of discretionary trusts. Beneficiaries (other than companies) get non-refundable credits to offset what they would have paid anyway.

For most operating businesses run through a trust, this means the family income-splitting benefit gets capped. If your spouse and adult kids have been receiving distributions to use their lower marginal rates, that benefit goes away once the trustee has paid 30% off the top.

There’s a three-year rollover relief window from 1 July 2027 to restructure out of a trust into a company or fixed trust without triggering CGT. That window matters. If your business structure was built around trust distributions, the next 18 months is when you decide what to do about it.

Primary production income, certain minor’s income, and income from existing testamentary trusts are excluded.

What it means for retirees

Division 296 super tax is still coming. This isn’t new in the Budget (it became law in March 2026) but worth a reminder. From the 2026-27 income year, super balances above $3 million attract an extra 15% tax on earnings (up to a total 30%). Balances above $10 million attract a further 10% (up to 40%). The thresholds are indexed.

Private Health Insurance Rebate uplift removed. From 1 April 2027, the age-based uplift goes. The savings are being redirected into the aged care system, including more residential beds and better home care affordability.

Aged care gets a funding boost. $606.5 million over four years for residential aged care, including new capital subsidies. $1.4 billion for the Support at Home program, with personal care (showering, dressing) now fully government-funded for all care recipients.

CGT minimum tax. Pensioners exempt. If you receive any means-tested income support payment (including the Age Pension) in the year you realise a capital gain, the new 30% minimum tax doesn’t apply to you.

Foreign buyers stay banned from established homes until 30 June 2029. Originally meant to end in March 2027, the ban was extended by two years and three months.

What it means for investors

This is the section that’s getting the most attention.

Negative gearing reform

From 1 July 2027, losses from established residential investment properties bought after 12 May 2026 (7:30pm AEST) will only be deductible against rental income or capital gains from residential property. Excess losses get carried forward to offset future residential property income.

The key word is grandfathering:

  • Properties owned before 12 May 2026. No change. You can keep negatively gearing them indefinitely.
  • Properties bought between 12 May 2026 and 30 June 2027. You can negatively gear during that window, but not from 1 July 2027.
  • Properties bought from 1 July 2027 onwards. No negative gearing on established homes.
  • New builds. Fully exempt. You can keep negatively gearing them before and after July 2027.

Properties held in widely-held trusts, superannuation funds (including SMSFs), and build-to-rent developments are also exempt.

Capital Gains Tax reform

From 1 July 2027, the 50% CGT discount disappears for individuals, trusts and partnerships. In its place:

  1. Cost base indexation. Your asset’s cost base gets lifted in line with inflation, so you’re only taxed on the real (post-inflation) gain.
  2. 30% minimum tax rate on net capital gains.

This applies to all CGT assets, including pre-1985 assets that were previously CGT-exempt.

A few important details:

  • Gains accrued before 1 July 2027 still get the 50% discount. You’ll need to establish each asset’s market value at 1 July 2027.
  • New residential builds can choose either the 50% discount or the new indexation method.
  • Age Pension and other means-tested support recipients are exempt from the minimum tax rate.

What this looks like in practice

Take an established investment property bought before Budget night for $400,000 and sold in 2029 for $560,000.

For gains accrued before 1 July 2027, the 50% discount still applies. For gains after that date, indexation kicks in.

In Treasury’s worked example, an investor in the top tax bracket pays around $16,303 in CGT under the new rules versus $14,100 under the old 50% discount. A modest increase, but the bigger impact will fall on people with bigger gains, longer hold periods, or assets that would have benefited heavily from the old discount.

Things that impact everyone

Fuel excise cut. Already in effect. Petrol and diesel excise was halved on 1 April 2026 (a 32 cent-per-litre reduction) for three months. The heavy vehicle road user charge went to zero for the same period.

Cheaper medicines. $5.9 billion over five years for new and amended PBS listings.

Foreign buyer ban extended for established homes until 30 June 2029.

Tax fraud protection. $86.3 million to modernise fraud detection in the tax and super systems, plus expanded ATO powers to chase fraud committed by tax intermediaries.

Digital ID system. $654 million over four years to maintain and expand Australia’s Digital ID infrastructure.

Winners and losers

The big winners: PAYG employees, first home buyers and small business owners. Potentially worse off: future property investors, family trust users and high-balance super members. And the mixed bag: business owners, retirees and families with adult kids, who’ll feel both sides of the ledger.

If you’re in the mixed bag or on the losing side, your financial strategy will likely need a revisit to offset any downsides of the reforms.

Key dates that matter

The bottom line

This Budget moved a lot of the financial furniture.

The negative gearing and CGT changes don’t take effect until 1 July 2027. The trust tax until July 2028. That gives you time, but not unlimited time, to think carefully about your structures, your investment property holdings, and what you might want to do before the rules change.

If you own an investment property bought before Budget night, you’ve been grandfathered. If you’ve bought one since, the rules have already shifted for you.

If you run a business through a discretionary trust, the next 18 months will determine whether you restructure or stay put.

If you’ve got assets sitting on substantial unrealised capital gains, the timing of when you sell matters more now than it did yesterday.

This is exactly the kind of moment where having your financial planning, accounting, lending and business advisory all in one place earns its keep. Decisions in one area trigger consequences in three others. Coordinated advice is the difference between making moves and making the right moves.

Want to work out what this means for you?

Book an introductory chat with the Navigate Advisory team. Fifteen minutes, no obligation, just a clear-headed look at how the Budget changes affect your specific situation.

navigateadvisory.com.au/contact

Navigate Advisory has offices in Balmain, Brighton-Le-Sands and Hurlstone Park. 

Call us on 9599-188 (1) for financial advice (2) for accounting advice.

General Advice Warning: Any advice in this article is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making any decisions.