The Budget 2026: Jim Chalmers announces negative gearing, capital gains changes, $250 tax relief

A new $250 Working Australians Tax Offset won’t be rolled out until July 2027, but will be permanent.

On top of last year’s stage three tax cuts, and the new $1000 instant deduction, it’s expected to save the average worker up to $2,816 in 2028 or $54 per week.

The exemption threshold to avoid paying the Medicare tax levy has been increased by 2.9 per cent, from this July.

The threshold for singles goes from $27,222 to $28,011. The family increases from $45,907 to $47,238.

“This offset is targeted to workers and represents the most meaningful, permanent increase to the effective tax-free threshold since Labor last increased it more than a decade ago,” Treasurer Jim Chalmers said.

The worst kept secret in Australian politics is finally out, with the Albanese Government fessing up to a major overhaul of negative gearing and capital gains tax rules for investors.

After categorically ruling out changes to capital gains tax and negative gearing rules during last year’s Federal election campaign, Prime Minister Anthony Albanese has done a U-turn – his Treasurer Jim Chalmers outlining changes in Tuesday’s Federal Budget.

The Albanese Government has sold the new investment rules as “changing Australia’s tax system to level the playing field” for young people locked out of the housing market – arguing they are often competing with cashed up investors buying multiple investment properties to take advantage of generous tax concessions.

Property experts warn negative gearing and capital gains tax rules aren’t just for the rich, but for every day mums and dads trying to build wealth for themselves and for future generations – fearing changes will see investors leave the established property market, forcing up rents and shrinking supplies.

Under the changes, anyone who had an investment property before Budget night will still be able to negatively gear their properties.

But as of July 1 next year, the Government will limit negative gearing to just new builds.

Investors who buy an investment property after Budget night will be caught up in the new rules.

“Investors who buy established housing after Budget night will still be able to deduct losses against residential property income,” according to budget papers.

“They will be able to carry forward unused losses to future years but won’t be able to deduct them against other income like wages.”

The Government will replace the 50 per cent capital gains tax discount with a discount based on inflation-adjusted indexation.

The CGT reforms will only apply to gains arising after July 1, 2027.

Investors in new builds will be able to choose the 50 per cent CGT discount or the new arrangements.

“We’ll also introduce a minimum 30 per cent tax rate on capital gains from July next year, and on discretionary trusts from July the year after,” Dr Chalmers said.

Read the full story here.

The family home has been protected from property tax changes in Jim Chalmers’ Federal Budget – albeit rising interest rates are making life tough servicing the Great Australian Dream.

But Mums and Dads hoping to build wealth by buying an investment property have a bit to think about, after the goal posts changed on Tuesday night.

Anyone who currently has an investment property won’t be affected by new negative gearing changes.

But the negative gearing tax break for investors will no longer be available on established properties come July 1 next year.

Negative gearing will instead only apply to new builds, like houses and land packages and new apartments.

Read more.

Workers and first homebuyers are among the winners of the Federal Budget while the Government has broken its promise to keep property investor taxes.

Winners:

Workers

A new $250 Working Australians Tax Offset was announced in the Budget but you won’t have the money in your pocket until at least the second half of 2027. The tax offset will roll out and become permanent from July next year. Combined with the $1000 tax deduction, the two could save the average worker $54 per week.

First homebuyers

Changes to the capital gains tax and negative gearing are expected to bring less competition for first homebuyers with the Government claiming it could help 75,000 more Australians achieve home ownership. Investors looking to sell before the capital gains tax changes in July 2027 could increase housing stock.

Small businesses

The Federal Government want to see Australian businesses grow by introducing a permanent $20,000 instant asset write-off for small businesses, a two-year loss carry back for all companies with up to $1 billion in turnover, and loss refundability for start-ups.

Aged care sector

It is hoped there will be more space for older Australians to move into aged care homes with the Budget including $3 billion to deliver more aged care beds and home care packages.

​See the losers here. ​

Jim Chalmers is calling his fifth Budget the most important and ambitious in decades, amid global uncertainty.

The impact of the Middle East conflict is set to last, with inflation and unemployment going up, but the Treasurer says Australia will avoid a recession and must pursue reform.

He’s announced an expected, but controversial, overhaul of negative gearing and capital gains tax for housing.

And a surprise $250 tax hand-out for workers, but you won’t see the money until late next year.

​Read the key takeaways here.​

Treasurer Jim Chalmers has risen in the House of Representatives to deliver the Federal Budget, describing it as one of the most significant in years.

He said it was the most “important and ambitious budget in decades”.

“Important, because the world is throwing a lot of challenges at us … and ambitious, because we have so much going for us.”

Dr Chalmers pointed to global instability as a key driver behind the government’s approach, warning the conflict in the Middle East was “pushing up prices, pushing down growth and punishing Australians”.

“We didn’t decide when this war began… but how we respond is up to us, how we help each other through and how we come out of this a stronger, fairer, more productive and more resilient nation.”

He said the Budget would focus on cost-of-living relief, health and housing, while laying out a broader economic strategy.

“This budget is ambitious in the face of adversity… a responsible budget, and it’s a reforming budget which builds resilience and bolsters our economy.”

Treasurer Jim Chalmers is set to hand down the Federal Budget at 7.30pm (AEST), outlining the government’s economic plan at a critical time for households and businesses.

Stay with us for live updates and analysis as the details drop, and what the changes will actually mean for your cost of living, taxes and finances.

One Nation MP Barnaby Joyce has cast doubt on the Federal Government’s claim that 75,000 additional Australians will be able to buy their first home under new housing policies.

Mr Joyce questioned whether property tax changes would actually improve housing affordability, pointing instead to past policy attempts.

“Paul Keating had a crack. It lasted for two years that they had to reverse it,” Mr Joyce told the ABC on Tuesday afternoon.

He also challenged the credibility of the government’s modelling behind its housing figures.

“I think we can start testing the veracity of their numbers and as I say if there are numbers out there already, and they can’t stand behind them and put meat on the bone on them, and all of a sudden you start doubting everything else.”

He argued that skepticism around the figures should extend to broader infrastructure decisions, referencing changes to major projects.

He then pointed to the scaling back of the inland rail project as part of his wider criticism of government planning and delivery.

Liberal deputy leader Jane Hume has signalled the Coalition could vote against expected changes to capital gains tax and negative gearing in tonight’s Budget, describing them as a potential “tax grab”.

Speaking on ABC’s Afternoon Briefing, Ms Hume said the Coalition’s default position would be to oppose tax increases.

“Our instinct will always be to vote against higher taxes.”

She argued the focus should instead be on boosting housing supply and economic growth.

“Higher taxes mean you get less of something, we want to see more houses, not fewer.”

Ms Hume also suggested the Coalition would take a firm stance if the measures were framed as revenue-raising rather than reform.

“We instinctively will say if this is just a tax grab, a cash grab, because the Labor government cash-strapped, well, that is not something we can support.”

Pressed on whether a future Coalition government would reverse any changes, Ms Hume said the party would await Opposition Leader Angus Taylor’s formal response.

“We would have to wait and see for opposition leader Angus Taylor’s budget reply speech on Thursday night.”

She said the Coalition wanted broader economic reform rather than policies that divide voters.

“We want to see more productivity injected into the economy so that we can grow the economy and everybody can benefit.”

“This idea of pitting one group, one demographic, against other demographic, we don’t think that is a recipe for not just economic growth, but a better society.”

Foreign Minister Penny Wong has spoken with US Secretary of State Marco Rubio in a wide-ranging discussion covering the Middle East conflict, Indo-Pacific stability and growing global energy pressures.

The call comes after Senator Wong’s recent diplomatic tour of the region, including visits to Malaysia, Brunei, Singapore, Japan, China, the Republic of Korea and Fiji.

Wong said the pair exchanged views on key regional challenges and ongoing global conflicts.

“Secretary Rubio and I discussed the conflict in the Middle East and our shared interests in the Indo-Pacific,” she said.

“Australia supports US efforts to negotiate an end to the war.”

A major focus of the conversation was energy security, with both sides agreeing on its importance amid continued global disruption.

“We reaffirmed the importance of energy security for the Indo-Pacific, where disruptions to the supply of essential goods, including petrol, diesel, jet fuel and fertiliser are disproportionately affecting the region,” Ms Wong said.

The discussion also touched on broader geopolitical tensions, including US President Donald Trump’s upcoming visit to China and ongoing negotiations between the US and Iran.

Ms Wong said Australia will continue working closely with international partners to manage the economic fallout from global instability.

“The Albanese Government will continue to work with partners, including in our region, to respond to this unprecedented shock to the global economy.”