Housing has taken centre stage in Prime Minister Anthony Albanese's landmark Budget, as he swings the axe at negative gearing and property tax incentives in a mammoth effort to fix generational inequality and provide cost of living relief.

Treasurer Jim Chalmers delivered a litany of broken election promises when he tabled his fifth Federal Budget on Tuesday night, announcing negative gearing will be wound back to only include new builds.

Capital gains tax discounts have also been reduced. Under the previous rules, investors only had to pay tax on half their profits upon selling. Now, the tax will only be indexed to inflation and apply to the sale of any asset – including stocks, property and businesses.

Australia will now have the highest capital gains taxes in the world.

During his speech to the House, Dr Chalmers framed the reforms as a ‘responsible’ way to make the tax system ‘fairer and stronger for workers, businesses, first home buyers and future generations’.

Meanwhile, every Australian who earns a wage or salary will get a $250 tax discount next year, all taxpayers will get an instant tax deduction of up to $1000, and the government is backing another minimum wage rise.

Cuts to the fuel excise will not be extended beyond June which means motorists will likely pay more at the bowser, and the government will kick 160,000 people from the NDIS in an effort to save $22billion over the next five years.

Here, Daily Mail Australia lays out the winners and losers from the 2026 Budget.   

Winners

Anyone who lives in their own home

Australians who live in their own homes are exempt from the new property taxes and could be the biggest winners of the Federal Budget.

Profits from the sale of primary residences remain exempt from capital gains taxes, while investors inn existing properties will lose both the 50 per cent capital gains tax discount and negative gearing benefits.

Workers 

The Albanese government is giving every Australian taxpayer who earns a salary or wage a tax break of $250 in the 2027-28 financial year, along with superannuation changes to ensure you retire with more in the bank.

The $250 offset will only impact those who pay tax from income earned from work, rather than from investments. Anyone who does not work, or earns below the tax threshold, will not benefit from the offset.

Dr Chalmers said it was ‘targeted to workers and represents the most meaningful, permanent increase to the effective tax-free threshold since Labor last increased it more than a decade ago’.

The measure will not be means-tested.

It’s an attempt by the Albanese government to address the imbalance between labour and investment income.

New payday laws will also force employers to deposit superannuation contributions to their employees' accounts at the same time as their wages, rather than the current requirement of four times per year.

It comes into effect on July 1 and will ultimately result in higher retirement balances because funds have more time to grow.

There are also changes to voluntary super contributions. Before-tax contributions will be capped at $32,500 per year, up from $30,000. After-tax contributions will be capped at $130,000, up from $120,000.

Super contributions are taxed at a rate of 15 per cent, which is roughly half the marginal tax rate paid by middle-income earners with taxable incomes between $45,001 and $135,000.

Existing landlords

Anyone who owned a property before Budget night will be exempt from changes to negative gearing.

Negative gearing allows investors to offset a loss-making property against other income, such as wages. This reduces the owner's taxable income, sometimes pushing them into a lower tax bracket.

Dr Chalmers said the changes would deliver a ‘fairer tax system for workers, first home buyers and future generations’ by ‘helping rebalance a system which is more generous to assets than it is to labour’.

The benefits of negative gearing have overwhelmingly gone to high-income earners who buy investment properties at and run them at a loss to bring down their tax rate.

The Albanese government says this has been a major contribution to generational inequality.

Investors who purchase existing homes after May 12 will only be able to use negative gearing until July 1, 2027.

Brand-new home investors

Investors who buy a brand-new house or apartment after Budget night will be able to negatively gear the property until they sell it.

They will also have the option of using the 50 per cent capital gains discount when they sell, or using the pre-1999 model when the discount was indexed to inflation.

For example, an investor who buys a new property for $800,000 and rents it out for $2500 per month - less than their monthly mortgage repayments of $3613 - would be able to offset the loss against their taxable income.

If they owned the property for more than 12 months before selling it for $1million, the 50 per cent discount would apply to the profit and they would only pay tax on $100,000.

If the investment was an existing home purchased after Budget night, the owner would not be able to offset the $1113 loss against their income, and they would have to pay tax on the entire $200,000 profit upon selling - minus inflation.

This measure is part of the government's efforts to encourage investment in new developments and boost housing supply.

First home buyers

First home buyers may finally be able to get their foot in the door following sweeping changes to property taxes.

Economic forecasters have suggested the price of existing homes could fall by as much as four per cent once negative gearing is phased out and the capital gains tax discount is reduced.

If existing homes aren’t as desirable for investors anymore, the demand for properties could ease and pave the way for new owner-occupiers.

A four per cent reduction on a $1.2million home amounts to a saving of $48,000.

First-home buyers will still be able to buy property with a five per cent deposit.

Taxpayers 

The Albanese government is changing the lowest tax brackets to ease the pressure on low-income earners in an effort to increase financial rewards from work.

From July 1, the 16 per cent rate on the lowest marginal tax bracket will be reduced to 15 per cent. This means anyone earning between $18,201 and $45,000 will pay one cent less in tax for every dollar earned.

Anyone earning more than $45,000 will also benefit from the reduction, saving a total of $268 per year, or $5.15 per week.

The 15 per cent rate will drop again to 14 per cent for the 2027-28 financial year.

Workers will also be able to claim an instant $1000 tax deduction without receipts for work-related expenses, up from $300.

The measure will apply to the next financial year and will save taxpayers up to $470.

Parents with newborns

The government will expand its paid parental leave scheme to 26 weeks from July 1, providing families with $14,000 more in paid leave than they’d be eligible for in 2022.

The scheme will now include a 12 per cent superannuation payment for the primary carer.

Anyone earning minimum wage

Labor confirmed support for higher wages for low-paid workers and has increased the minimum wage by $9,120 per year across four years.

The Fair Work Commission will phase out junior pay rates for 18- to 20-year-olds in retail, fast food and pharmacy modern awards.

Freight and logistics business owners

The government will pour $1billion into interest-free loans for freight and logistics companies to help move freight onto trains and ships, reducing fuel-heavy operations.

Interstate connectivity and biosecurity border processes will be streamlined to help get things like fertiliser to farms faster.

Anyone in aged care 

The government will invest more than $3billion to support residents in aged care.

About $1billion will go towards the treatment of personal care services through the Support at Home program, making them free of charge alongside other clinical care. 

More than $200million will go towards 20 additional specialist dementia care Program units and an expansion of the hospital to aged care dementia support program.

Public hospitals and medication

Labor will invest $25billion in public hospitals, which will hit $220.3 billion over five years.

A further $5.9billion will be spent adding more medicines to the Pharmaceutical Benefits Scheme.

For example, the cost of treatment for cystic fibrosis will save some individuals around $250,000 a year.

Losers

New landlords

Landlords who invest in existing homes after Budget night will not be able use negative gearing if the properties run at a loss.

While the tax reform will apply to properties acquired from budget night, it won’t come into effect until July next year under an arrangement designed to stop a stampede of buyers.

Labor hopes the move will dampen investor demand for existing properties and incentivise the construction of new dwellings.

Renters

Cash-strapped tenants have been forgotten in this year’s Federal Budget, despite sweeping changes to negative gearing set to make renting even more unaffordable.

Landlords who can't get tax breaks from running their investment properties at a loss could raise the rent to compensate.

For example, if a property was previously rented for $2,600 per month - less than the monthly mortgage repayments of $3,600 - the rent may rise by at least $1,000 per month to cover the shortfall.

Rental properties across the nation have hit all-time highs since 2020.

NDIS Recipients

The government will kick 160,000 people off the National Disability Scheme by 2030 in an effort to save $22billion over the next five years.

Instead of pumping funds into the overblown disability scheme, Labor will invest $3billion into support schemes outside the NDIS over the next three years.

Motorists

The fuel excise will not be extended beyond June, which means Aussies will be paying more at the bowser.

The fuel tax was halved on March 30 for three months due to the conflict in Iran, but Budget papers confirmed the measure will not be extended.

Anyone who invests in assets, including stocks, property, and business

The government has abolished the 50 per cent tax discount on all asset classes, including the stock market and existing property investments.

Under the old scheme, individuals and trusts that held assets for more than 12 months were able to claim a 50 per cent tax discount on profits earned from selling.

Capital gains taxes have now reverted to the pre-1999 system, where discounts were indexed to inflation.

Anyone who invests in assets, including stocks, property, and business

The government has abolished the 50 per cent tax discount on all asset classes, including the stock market and existing property investments.

Under the old scheme, individuals and trusts that held assets for more than 12 months were able to claim a 50 per cent tax discount on profits earned from selling.

Capital gains taxes have now reverted to the pre-1999 system, where discounts were indexed to inflation.

 Discretionary trust beneficiaries

A minimum 30 per cent tax rate will be applied to some trust distributions.

Under current laws, discretionary trust distributions to people over 18 are taxed at the recipient's marginal tax rates, which means they could pay no tax if their income is below the tax-free threshold of $18,200.

The practice allows high-income earners to pay substantially less tax by dividing their income among beneficiaries in order to reap the tax-free rewards.

The new scheme would tax the distributions at a minimum of 30 per cent, which is in line with company taxes.

There will be exemptions for farm, charitable and deceased estate trusts, and in cases of serious hardship.

Anyone who wants an electric vehicle 

The fringe benefits tax exemption for electric vehicles have been wound back.

The scheme that allows employers to avoid paying fringe benefits tax on EVs worth less than $91,387 if they were purchased through a novated lease will be transitioned to a 25 per cent discount.

The cost of the tax break to the federal budget has blown out in recent years from an initial $90million to $1.35billion in 2025-26 and had been expected to rise to $3billion by 2028-29.

But a phased tightening of the incentive will save taxpayers $1.7billion over four years from the 2026-27 budget.

From April 2027, the full tax discount will only apply to EVs costing $75,000 or less, while vehicles above $75,000 but below the luxury tax threshold will only receive a 25 per cent discount.

All EVs below the luxury tax threshold, which is $91,387 but rises each year with inflation, will only receive the 25 per cent discount from the same date.

The changes won't impact anyone with an existing lease.

Over 65's with health insurance

People older than 65 will no longer get rebates for private health insurance.

The cuts would mean those aged 65 to 69 would pay $205 more a year, while those aged 70 and over would pay $410 more a year on a gold policy - which is in line with everyone else.

The decision was made because some older Australians pay eight per cent less for private health insurance than younger people on the same income.