The hallmark of this budget is the intergenerational equity through achieving three big things on the revenue side: curbing negative gearing and capital gains tax breaks as well as ensuring that discretionary family trusts pay a minimum 30% tax.
These remarkable changes will raise around $100 billion in revenue over the next 10 years. These measures involve political risks as Labor failed to win elections in 2016 and 2019 on these tax matters, but it is time to address the intergenerational anxieties by rebalancing the taxation system.
This budget projected the economic growth to be 1.75% in 2026-27, thanks to the war in the Middle East, before recovering to 2.25% in 2027-28. The inflation is estimated to peak around 5% by June 2026, before easing to about 2.5% by the end of 2026-27 while the rate of unemployment is expected to be around 4.5% in the same year. The budget deficit is forecast at approximately $31.5 billion in 2026-27.
Property tax reform
From 1 July 2027, negative gearing on residential and commercial investment properties is abolished for existing properties, except for new builds. The existing negatively geared real estates are grandfathered and hence, excluded. The simple 50% capital gains tax (CGT) discount will be ended and reverted to inflation indexation, with a minimum 30% tax rate. The reforms will also apply to other asset types including shares. This new rule only applies to capital gains made from 1 July 2027. These measures will help 75,000 first home buyers purchase a home over the next decade.
Taxes on family discretionary trusts
From 1 July 2028, distributions from discretionary trusts will be taxed at 30%. This will curtail distributions to minimize tax, often by high-income households, through deciding to distribute incomes to low-income beneficiaries.
Individual taxes
From 1 July 2027, all working Australians will receive a tax offset of $250 a year and this will increase tax-free threshold from $18,200 to $19,985. Over 13 million taxpayers will benefit from this measure which will be funded by cutting back negative gearing and CGT discount on properties and other assets. Taxpayers will also get a $1000 instant no-receipt tax deduction, producing an average tax savings of $205 a year.
Housing supply
The budget will provide $2 billion over the next 4 years to local councils, power providers, and water utility businesses to build critical infrastructure which will support the construction of 65,000 homes. Another $500 million to speed up housing approvals. The ban on foreign investors buying existing homes will be extended from 31 March 2027 to 30 June 2029.
Healthcare
Over the next 4 years, the budget provides $25 billion to public hospitals, $1.8 billion to make 137 Medicare Urgent Care Clinics permanent and $5.9 billion to list more medicines on the Pharmaceutical Benefit Scheme (PBS).
Defense
Over the next 10 years, the Australian Defense Force is allocated $53 billion including $14 billion in the next 4 years, which will equate to 2.3% of Australian GDP. It will modernize the defense force by investing in drone and counter-drone technologies as well as fund the nuclear-powered submarines under AUKUS. There is also an allocation of $800 million for the Royal Commission into Defense and Veteran Suicides.
National Disability Insurance (NDIS)
Over the next 4 years, the budget allocates $15 billion to NDIS for implementing a new enrolment and digital payment system, mandatory registration of high-risk NDIS providers, and establishment of NDIS Quality and Safeguard Commission.
These measures will, on one hand, increase regulation, reduce fraud and enhance quality of care and, on the other hand, move over 160,000 current NDIS recipients to State/Territory based healthcare providers, saving the budget $36 billion over 4 years.
Education
The budget allocates, over the next 4 years, $54.8 million to help childcare centres care for children with additional needs, $17.6 million for national identity related to childcare workers, and $1.7 million for Life Education’s Healthy Harold program.
Aged Care
An allocation of $3 billion is made in the budget to support residents in aged care, including new beds as well as the Support at Home program.
Energy and fuel
The budget provides $7.5 billion to secure more fuel from international partners, including $3.2 billion to fund an onshore fuel security reserve, $2.9 billion to halve the fuel excise and reduce the heavy vehicle road users charge to zero for the quarter ending 30 June 2026, and 20% of gas exports reserved for Australians.
Australian businesses
Small business (annual turnover less than $10 million) can use tax loss carry back rules to offset losses against past year’s profits. Instant asset write-off aimed at these businesses for assets up to $20,000 is made permanent. R&D credit cap for large businesses is increased to $150 million. An interest-free loan of $1 billion is made available for manufacturing and logistics businesses in response to high fuel prices.
Migration intake
For 2026-27, the budget kept the permanent migration program at 185,000, of which more than 70% places are reserved for skilled migrants. Around 129,590 places are prioritized for migrants already living in Australia. About 55,110 places are for offshore highly skilled migrants.
Losers in this budget
Losers in the Federal Budget 2026-27 include property investors, NDIS recipients, trust fund users, international travelers (a $10 levy imposed from 1 January 2027), over 65 Australians with private health insurance (rebate of $240 is cut from 1 April 2027), gas exporters (reserved 20% of gas exports for Australians, curtailing their profits), and luxury electric vehicle buyers (from 1 April 2027, vehicles priced between $75,000 and $91,387 will receive a 25% fringe benefit tax discount, down from the current 100% discount).
Concluding remarks
Whether these reforms succeed politically remains uncertain. But the budget marks one of the most significant attempts in decades to rebalance Australia’s taxation system away from speculative property investment and toward younger working Australians struggling to enter the housing market. In that sense, the Budget 2026–27 may ultimately be remembered less for its short-term deficit and more for its attempt to restore intergenerational fairness.