6 budget takeaways and what they could mean for your finances
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Budget at a glance | Cost of living relief | Capital gains tax changes | Negative gearing changes |
First-home buyers | Income tax changes | House prices
Treasurer Jim Chalmers has handed down his fifth federal budget, calling it “the most important and ambitious budget in decades”. But what could it actually mean for your money, your tax and the cost of everyday life?
The budget tries to balance several pressures at once, including higher fuel prices, rising everyday costs and interest rates. It also looks at longer term challenges like the rising cost of disability support, fuel supply and housing affordability.
The budget at a glance
Inflation
Budget deficit
Cost of living relief: what you notice first
The government says this budget is about taking pressure off Australians, while making longer term changes. The initial impact for most households will come through fuel relief and tax changes detailed later in this article.
TTogether the cost-of-living relief and tax cuts could benefit an Australian worker on average earnings by up to $2,816 by 20281.
What changes to capital gains tax mean for property investors
Many cost-of-living measure and tax cuts come with trade-offs. To help pay for them, the government is proposing long term changes to capital gains tax (CGT), negative gearing and family and investment trusts.
CGT applies when an asset, such as an investment property or shares, is sold for more than its purchase price. In simple terms, it’s the tax you pay on the profit you make when you sell an investment.
Previously, Australians who held an asset for more than 12 months could generally access a 50 per cent CGT discount. That discount has been popular with property. Under the proposed changes, the Government will replace the 50 per cent discount with a system that adjusts gains for inflation and introduces a minimum effective tax rate of 30 per cent on certain capital gains from 1 July 2027. These changes will apply only to gains arising after that date.
Investors in newly built properties will be able to choose between the existing 50 per cent CGT discount and the new arrangements, in an effort to encourage additional housing supply.
To learn more about these changes, visit the Australian Government’s Budget website here.
Not sure about what these mean for you? Speak to your financial or tax adviser to learn more.
What the changes to negative gearing mean (and what negative gearing actually is)
Changes to negative gearing are the second pillar aimed at improving access to housing for younger Australians and represent a significant shift to property investment tax settings.
Negative gearing happens when the costs of owning an investment property, including loan interest, maintenance, insurance and rates, are greater than the rental income the property earns.
Those losses can currently be deducted from taxable income, reducing an investor’s tax liability.
From 1 July 2027, negative gearing will be limited to newly built properties, meaning investors in new builds can continue to deduct losses against other income. Existing arrangements will remain unchanged for properties held before Budget night.
If you’re unsure how these changes apply to your situation, a financial or tax adviser can help explain what to consider.
How will the budget impact first-home buyers?
A key focus of the Budget is improving access to home ownership, particularly for younger Australians.
Alongside these tax changes, the government will provide $2 billion for infrastructure supporting new housing developments. This funding will help local governments and states deliver essentials such as roads, power, water and sewerage, supporting up to 65,000 new homes.
The government is also extending the ban on foreign investors buying existing homes until mid-2029, ensuring more existing housing stock is available to Australian buyers.
Income tax changes and what they mean for your take home pay
This year’s budget has several changes to how much tax workers and small businesses pay.
Everyone’s financial situation is different. A financial or tax adviser can help you understand what this may mean for you.
Will the budget lower house prices?
The budget is designed to slow house price growth rather than lead to a major fall in prices. The logic is relatively straightforward: if property investment becomes less tax-effective, fewer investors may compete against first-home buyers at auctions, particularly for existing homes.
Treasury analysis suggests prices are unlikely to be noticeably affected in the short term . These are forecasts based on economic assumptions, not guarantees about what will happen in individual suburbs or markets. The government estimates house prices could grow around 2 per cent less than they otherwise would have over the next few years or about $19,000 on a median-priced home. Rental prices are expected to increase slightly before falling in the next few years.
What is the federal budget and why does it matter to you?
What does the budget mean for my household?
Sources:
1Budget 2026-27 - Resilience and reform (May 2026): Domestic economic outlook [https://budget.gov.au/content/overview/index.htm]
2Budget 2026-27 - Resilience and reform (May 2026): Appendix A: Budget aggregates [https://budget.gov.au/content/overview/index.htm]
3Fact sheet: fuel excise relief measures from 1 April 2026 www.infrastructure.gov.au/sites/default/files/documents/fact-sheet-fuel-excise-relief-measures-from-1-april-2026-2april2026.pdf
Contributor | Anthony Moir, Treasurer
Anthony joined Pepper Money in February 2021 as Treasurer. With over 25 years of experience in treasury and debt capital markets, he has worked with a diverse range of bank and non-bank lenders. Read more.
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