Federal Budget 2026–27: Key Tax Changes

The 2026–27 Federal Budget was handed down on 12 May 2026. With inflation continuing to moderate and the economy moving into a more stable growth phase, the Government focused on cost-of-living relief, productivity incentives and targeted revenue integrity measures.

Personal income tax: the previously announced reduction in the middle marginal tax rate to 14% from 1 July 2027 remains in place, and the Budget confirmed that the Medicare levy low-income thresholds will again be indexed. For many households, this means a little more take-home pay from 1 July 2027 and a reduced Medicare levy bill for lower-income earners.

Business investment: the $20,000 instant asset write-off has been extended for a further 12 months for eligible small businesses with aggregated turnover under $10 million. This allows qualifying depreciating assets to be immediately deducted, improving cash flow for businesses investing in tools, technology and equipment.

Energy and small business: additional deductions and offsets were announced for businesses investing in energy-efficient assets and electrification upgrades, with simplified eligibility rules and faster claim pathways.

Compliance and integrity: the ATO received further funding for its Tax Avoidance Taskforce and shadow economy programs, with a sharper focus on unpaid super, GST fraud, contractor misclassification and personal services income arrangements. Businesses should expect more data matching, nudge letters and targeted reviews.

If you have any questions about how the 2026–27 Federal Budget changes affect your personal or business tax position, feel free to get in touch.