Key takeaways:
- $1,000 instant tax deduction from 1 July 2026
- $250 Working Australians Tax Offset introduced from the 2027–28 income year
- Increasing Medicare levy thresholds for low-income individuals, families, seniors and pensioners by 2.9%
- Excise and excise-equivalent customs duty rates on most fuel products reduced by 60.9 per cent.
Working Australians Tax Offset
The Government will introduce a $250 Working Australians Tax Offset from the 2027–28 income year, which will provide a permanent annual tax offset to individuals earning employment or sole trader income.
The measure is intended to increase the effective tax free threshold for work-related income by nearly $1,800 to $19,985, or up to $24,985 where the Low-Income Tax Offset applies.
The proposed tax offset would represent the largest permanent increase since 2012-13 and is intended to deliver targeted cost-of-living relief, alongside the already legislated further tax cuts coming into effect for the 2027 and 2028 income years.
Instant Tax deduction
The Government proposes to introduce an instant tax deduction of up to $1,000 from 1 July 2026. This will remove the need for individuals claiming less than $1,000 to itemise their deductions, simplifying tax compliance.
Individuals with work related expenses exceeding the instant deduction would still be able to claim those expenses under the ordinary deduction rules. Non work related deductions such as charitable donations and union or professional association fees would remain separately claimable in addition to the instant tax deduction.
Increasing the Medicare Levy low-income thresholds
The Government is proposing to increase the Medicare levy low-income thresholds for low-income individuals, families, seniors and pensioners by 2.9% from 1 July 2025.
The increase in the thresholds will ensure low-income individuals and their families continue to be exempt from paying the Medicare levy.
The new thresholds are listed below:
| 2025-26 | |
| Singles | $28,011 |
| Families | $47,238 |
| Single seniors & pensioners | $44,268 |
| Family seniors & pensioners | $61,623 |
The family income thresholds will increase by $4,338 for each dependent child or student, up from $4,216.
Housing support measures
The Government has announced several housing support measures that extend on the previous measures intended to make it easier for Australians to buy and rent a home. These include:
- providing additional funding of $2.1bn over 5 years from 2025-26 to support increased housing supply and research
- extending the ban on foreign buyers from purchasing existing homes to 30 June 2029 to suppress upward pressure on prices
- replacing the existing CGT discount of 50% with cost base indexation for assets held for more than 12 months, with a minimum tax on net capital gains, to support home ownership rather than property investment
- limiting negative gearing for residential property to new builds to support home ownership rather property investment
Temporary reduction of fuel excise and heavy vehicle road user charge
Temporary measures (previously announced) were introduced to reduce financial pressure on Australian businesses and households affected by higher fuel prices.
Targeted relief supports drivers and the transport sector, offering immediate savings, particularly for those operating heavy vehicles.
The road user charge for heavy vehicles has been reduced from 32.4 cents per litre to zero for the same period.
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