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The weather’s getting colder and the prime minister and treasurer are everywhere you look, which can only mean one thing: The 2026 Federal Budget has been delivered.
The government is calling this budget “ambitious and responsible”, with big changes to how we tax wealth and a small tax break for workers, while the Opposition has labeled the budget “weird”, and is heavily criticising the government for breaking its promises not to touch negative gearing and capital gains tax.
There’s always plenty of noise around the federal budget, but we’ve taken a look so you don’t have to. Here are the 5 biggest takeaways from the 2026 Federal Budget that will actually matter.
1. It’s All About Housing
The government spent weeks before the budget laying the groundwork for big changes to negative gearing, capital gains and trusts, and they delivered. Treasurer Jim Chalmers is taking a genuine crack at fixing Australia’s broken housing market and tackling intergenerational fairness, winding back generous tax concessions on negative gearing and capital gains, and taking a bigger bite out of wealth stored in trusts.
From next year, negative gearing will be limited to new-builds only. The policy is designed to encourage investment in much-needed new housing while freeing up existing supply for first-home buyers. Capital Gains tax rates will be returned to pre-1999 levels (Before John Howard cut the rates), with an inflation-adjusted 30% minimum inflation-adjusted tax rate on all realised gains, and trusts will be hit with a minimum 30% tax rate to prevent them being used as tax-minimisation vehicles.
The changes will be grandfathered in, meaning people taking advantage of the existing rules won’t be affected, but the door has officially slammed shut on new negative gearing claims for existing properties. While the rules don’t fully transition until July 2027, any existing home bought from this morning onwards will be ineligible for those classic tax breaks. Taken together, Chalmers says these measurers will allow 75,000 first-home buyers to enter the market over the next decade.
This is the centrepiece of the budget Labor wants everyone to be talking about. It’s also a broken promise. Prime Minister Anthony Albanese was unequivocal before the election: The government would not touch these policy areas. Now they are.
Speaking to the media on Wednesday morning, Albo justified the broken promise: “It became obvious that everything that we were doing was not enough. We’re also saying we’re not going to sit back and just kick this can down the road again when we know that we need to do something to get those 75,000 additional people into a home.”
He’s hoping public opinion will be on his side because most people accept that the current system is broken, and that Labor has a responsibility to act when it has such a unique opportunity – a huge majority and an opposition in crisis – to act. Time will tell.
2. Things Will Get Harder Before They Get Easier
The cost-of-living (ie inflation and interest rates) are expected to continue rising sharply. Meanwhile, the government is tightening its belt and trying to get debt under control – combined, those two factors mean a lot of pain and not much support over the next few years.
Chalmers made it very clear in his speech that a lot of this budget is dependent on factors out of the government’s control – namely, when will the war in Iran end and the Strait of Hormuz re-open?
Inflation is expected to peak at 5% in the middle of this year, and won’t return to the RBA’s target band until mid-2027.
Meanwhile, the government says its showing spending restraint and a commitment to budget repair – Chalmers is touting a $45b improvement to the deficit over the next four years – and that means this budget has very few sweeteners, and deep cuts to popular services, including almost $38b out of the NDIS over the next four years.
3. A Tax Cut, and Maybe More?
One small sweetener: A permanent $250-a-year tax offset for wage earners. This is the government’s way of telling voters that it’s not all “tax-and-spend”, some of the benefits of these tax changes will flow directly to workers (at around $5 a week) – from the middle of next year.
Chalmers also hinted at more tax relief before the next election. Stay tuned.
4. What’s The Opposition Saying About the Budget?
The Opposition has come out swinging, but has its own tightrope to walk here. Unsurprisingly, Shadow Treasurer Tim Wilson was heavily critical of Anthony Albanese’s broken promise, and he no-doubt plans to remind us of it at every opportunity between now and the next election.
Wilson confirmed the Opposition won’t support the government’s changes to the tax system, and plans to reveal some housing policies of its own in the budget reply speech on Thursday night. The Opposition will back the government’s $250 tax offset.
“This is a Budget of broken promises, higher taxes, lower living standards and fewer homes,” he said. “It fails Australia’s future economy and has failed the basic test of restoring honesty, Australia’s security and living standards. It pulls the ladder of opportunity up from young Australians before they get their first foot on the rung.”
But the Coalition will need to be careful. Labor is making the calculation that the public will forgive them for breaking their promise if its to support a policy that most people believe in, to fix a system that most people agree is broken. Will the opposition really want to go into an election arguing for the status quo when there’s clearly a mood for change?
And then there’s that tightrope – the Coalition isn’t just fighting the government to its left, it’s being chased down by a resurgent One Nation on the right.
What’s One Nation Saying About the Budget?
One Nation has been saying for years that you can’t trust the big parties, and now they’ve been handed a big broken promise to play with, just as they’re gaining unprecedented electoral momentum. They’ll be thrilled.
The budget also didn’t have much to say about migration, a favourite topic for the right-wing party. You can expect the Coalition and One Nation to focus more on issues of supply (building more houses) and demand (reducing immigration), but both parties will need to strike a delicate balance on negative gearing and capital gains.
Either way, the stage is now set for the next election, due in 2028, to be fought on the battleground of housing, intergenerational fairness, and trust.
5. The 2026 Federal Budget by the Numbers
And just round things out, a few quick numbers that may be of interest you:
- A $45b improvement to the Budget bottom line over the forward estimates, but net debt is expected to be $767.8 billion (21.9% of GDP) by 2029-30
- As flagged a few weeks ago, $38b taken out of the National Disability Insurance Scheme (NDIS) in an attempt to slow the program’s rapid growth
- A $1000 standard tax deduction for work-related expenses in order to simplify tax returns
- Economic growth will slow to 1.75 per cent, down from 2.25 per cent
- In a worst-case scenario, if the conflict in the Middle East escalates, inflation is predicted to hit 7.25 per cent, and oil would cost $200 a barrel. Let’s hope not.
- $10 billion to be spent on strengthening Australia’s fuel supply
- And extra 5000 residential aged care beds
- $1.2 billion in lost tobacco excise revenue, as the government loses the battle against illegal tobacco
- An extra $6.8b over four years, and $35.6bn over the decade starting from 2026-27, to boost defence spending in an increasingly uncertain world
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