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Federal budget 2026: What you can expect in this year’s federal budget

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Published on

May 1, 2026

Australians are likely to be hit by major tax changes this year, including the loss of access to a popular franchise federal budgetwhich will be one of the most important in decades.

The budget will include three core packages – tax reform, austerity, and productivity and investment – aimed at tackling the intergenerational inequality challenges faced by young people.

Here’s what to expect when Chalmers announces his budget later this month.

Treasurer Jim Chalmers is about to announce the federal budget. (Alex Ellinghausen)

The specific reforms, including whether there will be provisions on grandfathering provisions for investors using the discount and negative gearing, are still a bit of a mystery.

The government has not confirmed the changes but has repeatedly failed to rule them out when given the chance. Chalmers and Prime Minister Anthony Albanese instead said the budget will tackle intergenerational unfairness in the tax system and housing market.

“What we are determined to see is a fairer economy that works for more people, including young people,” Chalmers said this week.

If reformed, it would be the first time the CGT discount has been reversed since the Howard government increased it to 50 percent in 1999, and the first time negative gearing has been changed since it was temporarily limited by the Hawke/Keating government in 1987.

In his pre-Budget speech in March, Chalmers said the tax reform package would also make the system simpler and more sustainable and boost business investment, but only “if we can afford it”.

“How much of that we can do in May depends a bit on budget considerations, international developments and of course also on cabinet deliberations,” he said at the time.

The government will try to tackle intergenerational inequality in the housing market in the budget. (Joe Armao)

Changes include stricter criteria, standardized and evidence-based assessments, fraud prevention and reduced spending on social and community participation per participant and daily activities.

Early modeling shows the changes will reduce the number of people on the NDIS from 760,000 to 600,000 by the end of the decade.

“It costs too much and is growing too fast,” Butler said in April.

“We cannot afford for the NDIS to continue to grow at its current rate.”

The government has announced it will cut billions from the NDIS. (Getty)

Defense will receive an additional $53 billion over the next decade, increasing spending to 3 percent of Australia’s GDP by 2033 under the NATO methodology.

US President Donald Trump has pressured Australia and NATO countries to increase their defense spending, complaining that the US is doing much of the heavy lifting.

The funding increase, announced last month by Secretary of Defense Richard Marles, was paid for in part by the sale of military land and will provide greater warfighting capabilities, systems and communications.

The ADF gets a $53 billion boost. (Australian Defense Force)

The federal government has halved fuel duty and abolished the road user charge for heavy vehicles from April 1 to June 30 to provide some relief to motorists struggling with rising fuel costs, which will be financed from the budget.

It was estimated that the measure would reduce fuel costs by 26.3 cents per liter and almost $19 on a 65 liter tank.

The Australian Competition and Consumer Commission is monitoring fuel prices across the country to ensure cost savings are passed on.

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