On the 12th of May 2026 the federal government handed down its 2026–27 budget, officially called “Resilience and Reform.” Every year, the government releases a budget that maps out how it plans to spend public money and collect taxes for the coming financial year. It’s essentially a plan for the country’s finances, and the decisions made in it ripple out to almost everyone, including you.
Even if you’re still in school, the budget affects the world you’re about to step into. Whether it’s the tax you’ll pay when you start working, the cost of seeing a doctor, or how realistic it is to one day own a home, what gets decided in the budget shapes your options. Here’s what came out of yesterday’s announcement and why it matters.
What is a federal budget?
The federal government needs money to pay for things like hospitals, schools, roads, and social services. That money comes mainly from taxes paid by workers and businesses. Once a year, the Treasurer delivers a budget to parliament that outlines how much money the government expects to bring in and how it plans to spend it.
Think of it like a household budget, just at a national scale. If the government spends more than it collects, it runs a deficit. If it collects more than it spends, it runs a surplus. The decisions made in the budget directly affect things like how much tax workers pay, what healthcare costs, and whether there’s funding available for housing or education.
The 2026–27 budget was handed down on 12 May 2026 and covers the financial year beginning 1 July 2026.
Tax changes and what they mean for workers
One of the biggest announcements in this year’s budget is a series of tax cuts for working Australians. From 1 July 2026, the tax rate on income earned between $18,201 and $45,000 will drop from 16% to 15%. Then, from 1 July 2027, it drops again to 14%.
That 2% reduction might sound small, but it adds up. If you’re working part-time and earning around $30,000 a year, a 2% cut means you keep an extra $236 or so over the course of the year. For someone earning $45,000, the saving is closer to $536 annually from 2027. That’s real money, especially when you’re just starting out.
Other tax-related changes in this year’s budget that could affect you once you’re working include:
- A $1,000 instant tax deduction for workers, meaning you can reduce your taxable income by $1,000 without needing to keep receipts for work-related expenses
- A $250 Working Australians Tax Offset from 2027–28, which is an additional annual tax cut on top of the rate reductions
- A phase-out of junior pay rates for 18 to 20 year olds in retail, fast food and pharmacy, meaning workers in those industries will move toward adult pay rates sooner
If you’re already working part-time, some of these changes could apply to you sooner than you think.
Housing and what it could mean for your future
Buying a home is one of the most common long-term goals young people have, and it’s also one of the hardest to achieve right now. This budget includes a few changes aimed at making that more realistic over time.
The most significant is a reform to negative gearing and capital gains tax. Negative gearing is a tax arrangement where property investors can reduce their taxable income using losses from investment properties. This has historically made it easier for people who already own property to keep buying more, which contributes to pushing prices up for everyone else.
From 1 July 2027, negative gearing will be limited to new builds only. Investors who purchase established homes after yesterday’s announcement won’t be able to claim those losses against other income like wages. The capital gains tax discount will also change, moving from a flat 50% to one based on inflation instead. These changes are estimated to support an additional 75,000 homeowners over the next decade.
Other housing measures in the budget include:
- A $2 billion Local Infrastructure Fund to help build the infrastructure needed to support up to 65,000 new homes
- Continued support for renters through Commonwealth Rent Assistance, which supports over 1.4 million people currently renting
- $59.4 million for social housing specifically for young people aged 16–24 who are at risk of, or already experiencing, homelessness
None of these changes will make buying a home easy overnight. But they’re aimed at gradually shifting the balance away from investors and toward people buying their first home.
Cheaper medicine and healthcare access
Healthcare is something most young people don’t think about much until they need it, but the cost of seeing a doctor or filling a prescription affects families every day.
This budget puts a significant focus on making healthcare more accessible. The government is investing $11.4 billion to increase bulk billing rates, with a goal of nine out of ten GP visits being bulk billed by 2030. Bulk billing means your doctor charges the government directly through Medicare rather than charging you out of pocket. Since late 2025, over 1,400 GP practices that previously charged patients have switched to fully bulk billing.
For medicines, the budget includes $5.9 billion to list new medications on the Pharmaceutical Benefits Scheme (PBS), which is the system that subsidises the cost of prescription medicines. Medicines on the PBS cost significantly less than they would at full price, and the new listings include treatments for conditions like cystic fibrosis, kidney disease, and various cancers.
Other healthcare changes include:
- $1.8 billion to make Medicare Urgent Care Clinics permanent, with the aim of having four in five Australians within a 20-minute drive of one by July 2026
- $25 billion in additional funding for public hospitals over the next five years
These changes affect your family now and will continue to affect you as you move into adulthood and start managing your own healthcare.
Why this budget matters to you
You don’t need to understand every line of a federal budget to get something useful out of it. What matters is recognising that the decisions made in it shape the environment you’re entering, whether that’s your first pay cheque, your ability to see a doctor without paying upfront, or how realistic it is to buy a home one day.
If you want to dig into the detail yourself, the full 2026–27 budget is available at budget.gov.au.
