This year’s Federal Budget has been framed around “resilience and reform”, with a focus on supporting Australians through a period of global uncertainty while setting the foundation for longer-term economic growth. The Treasurer delivered the 2026–27 Federal Budget on 12 May 2026.
Ongoing geopolitical tensions, higher energy prices and uncertainty around inflation continue to influence the global outlook. Despite these pressures, the Budget is built around the idea that Australia’s economy can remain relatively resilient while gradually working through a more challenging period.
For many Australians, the Budget can feel like a lot to take in. There are headlines about tax, housing, inflation, deficits and economic growth, but the real question is usually much simpler: what does this mean for me?
The economic outlook
At a headline level, the Budget forecasts a deficit of $31.5 billion for 2026–27, with deficits expected to remain across the forward estimates. EY notes this is an improvement compared with earlier projections, but still reflects ongoing spending pressures and a softer economic environment.
Economic growth is expected to soften in the near term before gradually improving. Inflation also remains a key issue, with higher fuel and transport costs expected to place further pressure on households and businesses. CPA Australia notes that Treasury expects higher fuel prices to flow through to a broader range of goods and services in the coming months.
While forecasts can change, the broader message is that Australia is expected to continue working through a period of slower growth, higher costs and global uncertainty.
Cost of living and household support
Cost of living remains one of the major themes of the Budget.
The Government has announced measures aimed at providing targeted relief, including tax changes and adjustments to Medicare Levy settings. These are designed to provide some support to households without placing too much additional pressure on inflation.
While these measures may help, many Australians are still likely to feel pressure from everyday expenses, interest rates, energy costs and broader uncertainty about the economy.
Housing, productivity and investment
Housing remains a major focus of the Budget, with new measures aimed at increasing supply and encouraging investment in new homes.
Productivity is also a key theme, with the Government acknowledging that long-term improvements in living standards rely on stronger economic output. Funding has been directed towards areas such as reducing red tape, supporting business investment and improving infrastructure.
These measures are more long-term in nature, meaning their impact may take time to flow through to households and the broader economy.
Tax reform and structural changes
The Budget also includes several important tax reforms.
These include changes affecting capital gains tax, negative gearing and discretionary trusts. Deloitte described the Budget as including “modest but meaningful changes to the tax system,” including capital gains, negative gearing of residential property and discretionary trusts.
MinterEllison has also noted that the Budget introduces major tax and economic reforms, including changes to capital gains, negative gearing and trusts, which may affect investors, businesses and households depending on their circumstances.
These changes will not affect everyone in the same way. The impact will depend on your personal situation, including your income, assets, superannuation, investments, property ownership, business structures and retirement plans.
Looking ahead
As with any Budget, the outlook remains subject to change. Economic forecasts can shift, global events can move quickly, and not every announcement will be relevant to every person.
That is why advice is important. Budgets can create a lot of headlines, but the real value is understanding what may actually matter for your own financial position.
Our role is to stay across these changes, consider what may be relevant, and help ensure your financial strategy remains appropriate as conditions change.
If you have any questions about how the Federal Budget may affect your financial plan, superannuation, investments or retirement strategy, we’re always here to help.
Important Information:
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The information in this article is general in nature and does not take into account your objectives, financial situation or needs. Before acting on this information, consider whether it is appropriate to you, and seek personalised advice where required.
