The Budget Breakdown: Beyond the Buzzwords

By Aishah Ahmed

If you’re anything like the average uni student, there’s a good chance your understanding of the Federal Budget comes entirely from Instagram infographics and hearing the phrase “cost-of-living relief” repeated every five minutes last week. Still, the 2026-27 Federal Budget includes some pretty major changes, particularly around tax, housing and investment.

This year’s Budget comes at a complicated time for the Australian economy. The government is forecasting deficits totalling around $150.5 billion by 2029-30, while net debt is projected to reach $767.8 billion, or 21.9% of GDP, by the end of the decade. Inflation pressures also remain high, rents are continuing to rise and economic growth is slowing. In response, the Albanese Labor government says this Budget is focused on easing cost-of-living pressures while also pursuing what it calls “intergenerational equity.”

The biggest headline from the Budget was the overhaul of capital gains tax (CGT) and negative gearing. From 1 July 2027, the current 50% CGT discount will be replaced with a cost-base indexation system and a minimum 30% tax on net capital gains for individuals. The government says the changes are designed to reduce tax advantages tied to investment income and make the tax system fairer. Negative gearing rules are also changing, with investors purchasing established residential properties after May 2026 no longer able to deduct rental losses against their general income. Instead, those losses can only offset future rental income or capital gains. Existing investment properties, however, remain grandfathered under the current rules. Together, the reforms are expected to raise around $8.1 billion by 2029-30.

Alongside the investment tax reforms, the Budget also included smaller tax measures aimed at workers more broadly. The tax rate for Australians earning between $18,201 and $45,000 will gradually decrease from 16% to 14% over the next two years, while a new $250 Working Australians Tax Offset and a $1,000 instant tax deduction for work-related expenses will also be introduced! Generally though, housing affordability remained one of the Budget’s largest focuses. The government announced $2 billion over four years towards housing-enabling infrastructure and continued funding for Commonwealth Rent Assistance and the Homes for Australia plan. Despite this, rents are still forecast to rise by around 4% over the next year, highlighting how supply shortages remain a major issue. The government estimates its housing reforms could support around 75,000 additional first-home buyers over the next decade, although economists remain divided on how much impact the measures will actually have in the short term.

Healthcare spending also increased significantly, with additional funding directed towards Medicare, bulk billing, PBS medicines and women’s health initiatives, including reproductive healthcare and endometriosis support. PBS medication costs remain capped, while broader healthcare spending continues increasing as part of the government’s cost-of-living strategy. For students balancing study, work and rising living expenses, healthcare affordability has become an increasingly important issue. The Budget also included major spending on energy and climate policy. The government announced an $11.9 billion National Fuel Security Plan, alongside investments into renewable energy infrastructure, EV charging stations and solar panel recycling programs. At the same time, temporary fuel excise cuts are ending after June 30, meaning fuel prices are expected to rise again. Migration and education policy also featured heavily throughout the Budget. Net overseas migration is expected to continue declining over the next two years, while additional funding was directed towards migration integrity measures, skills recognition programs and the National Student Ombudsman. The government also flagged tighter scrutiny around international student visa applications following the large post-pandemic migration surge.

More broadly, this year’s Budget feels focused on balancing immediate cost-of-living relief with longer-term economic reform. The current Albanese Labor government is trying to reduce financial pressure through tax cuts and healthcare spending while also reshaping parts of the housing and investment system that it argues contribute to inequality between generations. Whether the changes actually make life noticeably cheaper for students remains unclear. Still, compared to previous budgets, this one places a much heavier focus on us younger Australians, housing affordability and wealth inequality.