Today, the Albanese Government is introducing legislation to deliver more tax cuts for Australian workers and tax reform to help more Australians own a home of their own.
This is all about helping more Australians get ahead and backing the Australian ambition of home ownership.
For too long it's been too hard for Australians, particularly younger Australians, to buy a home of their own and this government is acting now to change that.
This legislation will help 75,000 Australians realise the dream of homeownership, deliver a new round of tax cuts for more than 13 million Australian workers and make tax time simpler.
This legislation is about cutting taxes again and again, making it easier to buy a first home, and better aligning the tax treatment of income from work and income from assets.
The Treasury Laws Amendment (Tax Reform No.1) Bill 2026 and Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026 will implement the following reforms:
- Delivering a new Working Australians Tax Offset (WATO) to provide a permanent annual tax offset of up to $250 to every working Australian taxpayer. WATO will automatically reduce workers' tax liability on their income earned from working from the 2027-28 income year.
- Introducing the $1,000 instant tax deduction from 2026-27 to allow workers to deduct up to a thousand dollars off their taxable income without keeping receipts.
- Replacing the 50 per cent capital gains tax (CGT) discount with a new discount based on inflation for gains accruing from 1 July 2027. Investors in new builds will have a choice between the 50 per cent discount and the new arrangements.
- Introducing a minimum tax rate of 30 per cent on real capital gains accruing from 1 July 2027. Recipients of certain income support payments, such as the Age Pension and Jobseeker, will be exempted from the minimum tax.
- Limiting negative gearing for residential property to new builds from the 2027-28 income year. Arrangements will remain unchanged for all existing investments made before 7:30pm AEST on 12 May 2026.
The Government's changes to CGT and negative gearing will back more Australians in their aspiration to get ahead and own their own home and support investment in new housing supply.
The changes will be prospective, limiting the impact on existing investments and preserving the gains investors have made.
Capital gains on existing investments that accrue prior to 1 July 2027 will retain access to the 50 per cent discount, while capital gains which accrue from 1 July 2027 will be subject to the new inflation‑based discount and the minimum tax. The changes to negative gearing will only apply to established properties acquired after the policy was announced on Budget night.
The new WATO and instant tax deduction build on the already legislated tax cuts that will come into effect from 1 July 2026 and 1 July 2027. The combined benefit for an Australian worker on average earnings from these measures will be up to $2,816 per year from 2027-28, compared to 2023-24 tax settings.
This is the first tranche of legislation to implement the Government's tax reforms. Legislating these core provisions is appropriate to ensure the core policy features that apply broadly to most taxpayers are in place, providing certainty to taxpayers and market participants.
Legislating significant reforms in tranches is a standard approach, and past reforms such as the GST and other major changes have similarly been implemented in tranches.
