Federal Budget 2026: Key Changes and Strategic Considerations for Australians

The 2026 Federal Budget introduced a broad mix of proposed measures impacting taxation, investing, property, aged care and long-term financial planning. While many of the announcements are not yet legislated, the Budget highlights several areas where Australians may benefit from reviewing their financial strategies.

For individuals, families, retirees and investors alike, the changes reinforce the importance of proactive planning and staying adaptable as economic conditions and legislation continue to evolve.

Property Investors Face Significant Proposed Changes

For property investors, the Budget introduced some of the most substantial proposed reforms.

From 1 July 2027, losses from established residential investment properties purchased after 12 May 2026 may no longer be offset against other forms of income. Instead, those losses could only be applied against future rental income or capital gains associated with residential property investments.

Importantly, existing property holdings and certain newly constructed residential properties are expected to retain the current negative gearing treatment.

The Government also proposed major changes to Capital Gains Tax rules. The current 50% CGT discount for assets held longer than 12 months would no longer apply to future gains accruing after 1 July 2027. Instead, gains would move to an inflation indexation model, where the asset’s cost base is adjusted for inflation before tax is calculated.

These proposed changes could significantly alter long term investment modelling, particularly for investors focused on capital growth strategies.

Existing Investors May Retain Current Rules

While the proposed property and CGT reforms attracted significant attention, an important detail is that many existing investments are expected to retain current treatment under grandfathering provisions.

The proposed negative gearing changes generally apply only to established residential properties purchased after 12 May 2026. Likewise, existing investments are expected to retain the current CGT treatment for gains accrued before July 2027.

This distinction is important because it means many current investors may not experience immediate changes to their existing portfolios.

However, future acquisition decisions, ownership structures and investment modelling may still require careful review as the legislative environment evolves.

Trust Structures Under Review

Another significant proposal relates to discretionary trusts.

From 1 July 2028, discretionary trusts may become subject to a minimum 30% tax rate on trust income. The measure is expected to reduce the tax advantages traditionally associated with distributing income to lower income family members.

For families and business owners using trust structures, this may prompt a review of whether current structures remain appropriate and efficient under the proposed rules.

Tax Changes and Work-Related Deductions

One of the headline announcements is the introduction of a new $1,000 instant tax deduction for eligible work-related expenses from the 2026/27 financial year. Employees will be able to claim up to $1,000 without itemising expenses, although claims above this amount will still require supporting records.

The Budget also reaffirmed previously legislated tax cuts, including reductions to the lowest marginal tax rate from 16% to 15% from July 2026, and then to 14% from July 2027.

Additionally, a new Working Australians Tax Offset is proposed from the 2027/28 financial year, providing eligible workers with up to $250 annually in additional tax relief.

While individually these changes may appear modest, together they may improve after tax cash flow for many Australians over time.

Support for Small Business

The Budget also included positive news for small businesses and self-employed Australians.

The instant asset write off threshold is proposed to become permanently set at $20,000 from 1 July 2026, allowing eligible small businesses to immediately deduct the cost of qualifying assets rather than depreciating them over time.

This measure may assist cash flow management and investment planning for many businesses.

Superannuation Changes Remain Limited

Unlike previous years, the Budget included relatively few superannuation changes.

One notable update is the expansion of the Low Income Superannuation Tax Offset (LISTO), increasing both the income threshold and maximum payment available from July 2027.

For lower income earners, this may improve the long-term value of concessional super contributions.

Changes for Retirees and Older Australians

Several announcements focused on aged care, health costs and retirement related support.

Additional funding will be directed towards residential aged care and Support at Home services, including increased package availability and reduced out of pocket costs for certain personal care services from October 2026.

The Budget also proposed changes to private health insurance rebates for Australians aged over 65. From April 2027, older Australians would no longer receive a higher rebate solely based on age, potentially increasing net premium costs for some retirees.

For retirees planning overseas travel, changes to Pension Supplement rules may also affect payments during extended periods overseas.

Aged Care Funding and Support at Home Reforms

A major focus of the Budget was increased support for aged care and home care services. Additional funding is expected to expand residential aged care capacity while also increasing the availability of Support at Home packages.

Importantly, from October 2026, certain personal care services provided through Support at Home programs may become fully Government funded for eligible recipients. Personal care services include support such as:

• Showering
• Dressing
• Non clinical continence management

However, other services may still involve co-payments depending on an individual’s income and assets.

These reforms highlight the growing importance of proactive aged care planning. Earlier preparation may provide families with greater flexibility, improved financial outcomes and reduced pressure during periods of urgent care decisions.

Aged care planning is increasingly connected to:

• Retirement income strategies
• Family wealth planning
• Estate planning
• Asset structuring
• Cash flow sustainability

For many families, the earlier these conversations occur, the more options may be available.

Medicare Levy Threshold Changes May Benefit Lower Income Australians

The Federal Budget also included changes to Medicare levy low-income thresholds, increasing them by 2.9% for singles, families, seniors and pensioners for the 2025/26 financial year.

For Australians with income levels close to the Medicare levy thresholds, this may result in either a reduced levy or no levy payable at all. While the savings may appear relatively modest, the changes may assist lower income households and retirees managing ongoing cost pressures.

For retirees and pensioners in particular, even smaller reductions in taxation can contribute positively to long term cash flow management, particularly when combined with broader retirement income strategies.

Electric Vehicle Tax Concessions Begin to Tighten

The Budget also proposed changes to the Fringe Benefits Tax concessions available for eligible electric vehicles provided through work arrangements and novated leasing structures.

Currently, eligible EVs under the fuel-efficient luxury car tax threshold can access a full FBT exemption. However, from April 2027 onwards, the concessions will begin scaling back for higher value vehicles.

Under the proposed changes:

• Eligible EVs up to $75,000 may continue receiving full concessions for a transitional period
• Higher priced vehicles may instead receive only a partial FBT discount
• Plug in hybrid vehicles have generally already ceased eligibility unless transitional arrangements apply

For professionals using salary packaging strategies, this may alter the overall financial benefit of EV novated leasing arrangements over time.

As legislation evolves, individuals considering salary packaged vehicle arrangements may benefit from reviewing future affordability and tax outcomes carefully before entering new agreements.

What the Proposed NDIS Reforms Could Mean for Families

The Budget also announced a package of National Disability Insurance Scheme reforms aimed at improving long term sustainability and strengthening oversight of the system.

The reforms are expected to include:

• Stronger fraud controls
• More consistent eligibility assessments
• Tighter provider oversight
• Changes to funding and support assessment processes

While the Government indicated that current participants are not expected to lose essential supports immediately, the reforms may result in increased scrutiny around plans, reassessments and funded services over time.

For families supporting loved ones with disability related care needs, this reinforces the importance of long-term financial planning, cash flow management and ensuring broader family strategies remain adaptable as policy settings evolve.

Why Reviewing Your Strategy Matters

While many of these announcements are still proposals only, the direction of the Budget signals ongoing changes across taxation, investing and retirement planning.

For investors, families and retirees, this may be an appropriate time to review:

• Investment structures

• Property acquisition strategies
• Trust arrangements
• Retirement income planning
• Estate and aged care considerations
• Tax efficiency strategies

Financial strategies should not remain static. As legislation, markets and personal circumstances evolve, proactive reviews can help ensure your strategy continues to support your long-term goals. At MiQ Private Wealth, we work with clients to provide strategic, personalised financial advice tailored to changing conditions and evolving opportunities.

If you would like to discuss how the proposed Federal Budget changes may impact your situation, get in touch with the MiQ team today.