Canberra, May 12, 2026: Treasurer Jim Chalmers handed down the 2026-27 Federal Budget tonight, delivering a mix of income tax relief, cost-of-living support, and property reforms as Labor’s first budget since re-election last year.
From July 1, 2026, the 16% tax rate on income between $18,201 and $45,000 drops to 15%, falling again to 14% from July 1, 2027. Combined with a new $1,000 Instant Tax Deduction for work expenses without receipts and a $250 Working Australians Tax Offset, the average earner will see up to $2,816 in combined annual benefit by 2027-28.
Cost-of-living support
The Budget extends energy bill rebates with two additional $75 quarterly payments to over 10 million households through December 31, 2025, at a cost of $1.8 billion. Medicare levy low-income thresholds will also rise 4.7% from July 1, 2024, providing $648 million in relief. Student debt and housing
The government will wipe $19 billion from HELP and student loan debts via a one-off 20% reduction before indexation on June 1, 2025. The minimum HELP repayment threshold rises to $67,000 in 2025-26, with repayments calculated only on income above that level. Foreign buyers will be banned from purchasing established dwellings for two years from April 1, 2025. The Budget also commits $3.1 billion to build 100,000 new homes and $2 billion for critical housing infrastructure.
Health, defence & fuel security
The private health rebate for over-65s will be reduced as part of tax reform. More than $3 billion will support aged care residents and the ‘Support at Home’ program. Defence spending will rise to 3% of GDP by 2033, with a $53 billion boost over 10 years. A $10 billion package will increase the national fuel stockpile to 37 days and establish a government-owned reserve of one billion litres of diesel and aviation fuel.
Other reforms
The NDIS will be tightened, reducing participants by 160,000 from 760,000 by 2030. Aged care plans will fully subsidise showering, dressing and incontinence care.
The underlying cash deficit is estimated at $27.6 billion for 2024-25. The Budget includes $63.8 billion in savings and reprioritisations. Victoria will receive $3.8 billion for its Suburban Rail Loop project.
Chalmers said the Budget delivers an “ambitious” productivity and savings package while considering further tax reform.
Coalition reaction
The Coalition slammed the government for changing negative gearing and the capital gains tax (CGT) discount, labelling them as broken promises that will harm investors and housing supply.
Shadow Finance Minister Jane Hume described the budget’s fiscal stance and rising debt as “intergenerational theft,” arguing that meager tax relief will not offset cost-of-living pressures, such as bracket creep.
Opposition Leader Angus Taylor is expected to deliver a “genuinely different” alternative in his budget reply speech on Thursday, May 14, 2026.
FECCA statement
The Federation of Ethnic Communities’ Councils of Australia (FECCA) has in a statement said, “… acknowledges the establishment of the Office for Multicultural Affairs and real investments that will help and benefit multicultural communities. This includes $25 billion investment in public hospitals, the expansion of bulk billing, $1 billion towards subsidising personal care for older Australians, and long overdue investments in women’s health, including $10.8 million for the Health in My Language program to provide community-led health literacy education to refugee and migrant women.”
“The 2026-27 Federal Budget reduces funding for the Multicultural Affairs and Citizenship program by $160 million. This will impact the services that help newly arrived Australians put down roots and strengthen the sense of belonging that we are trying to build as a nation, ” the statement says.
Federal Budget 2026 online here: https://budget.gov.au/
Leader of opposition Budget 2026-27 reply – https://www.liberal.org.au/2026/05/14/budget-address-in-reply
Note- Many sources including AI used for this report. Any mistake will be corrected.
