Federal budget — what we know and how Australia is reacting

The budget consists of hundreds of pages of facts and figures but visualising it as a $100 note helps in seeing how the government plans to spend your tax dollars.

The federal government is set to spend $833.2 billion in this year's budget, an increase of $47.5 billion, with pensions and social support programs contributing to over a third of the nation's expenses.

Most of the spending will go to social security and welfare payments, which will receive 37.1 per cent of the total projected spending. This is almost identical to last year's spend.

Source: SBS

Social security payments are expected to grow to almost 40 per cent of all spending by 2030, driven by demand for disability support programs and aged care services.

Health is the next big area of spending for the government at 16.4 per cent, then education at 6.9 per cent and defence at 6.2 per cent.

The government has also forecast a spend of 19.6 per cent for "other purposes" which include expenses incurred in servicing public debt and natural disaster relief.

The remainder of spending or "all other services" includes housing, transport and energy.

Where does this money come from? Almost half of its projected revenue comes from individual and other withholding tax, followed by company tax and goods and services tax.

Source: SBS

Read more from our reporter Cameron Carr below:

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Where your tax money goes: Breaking down the federal budget as $100

Small business owners, first home buyers, migrants and travellers are just some of the Australians impacted by the 2026-27 federal budget.

Winners include taxpayers, small businesses and older Australians, while travellers, foreign investors, trust recipients, property investors and the economy will face more difficult conditions.

Winners

Working Australians will get a new $250 Working Australians Tax Offset (WATO), effective from 1 July 2027, on top of the $1,000 instant tax deductions that Australians can claim, without producing receipts, coming into effect in this year's tax return.

For small businesses, the budget will reintroduce a loss carry-back scheme, allowing small businesses to invest in their operations and claim a tax refund if they consequently run at a loss during the prior two income years.

For older Australians, there will be an additional 5,000 aged care beds created as part of a $3.7 billion aged care package.

Migrant tradies will benefit from rules allowing an additional 4,000 trade workers to enter the workforce each year, as the government accelerates skill assessments and occupational licences in a move that's expected to reduce the time taken to enter the workforce by at least six months.

Losers

The economy: the government's updated gross domestic product forecasts are down for the next three years, expecting slower growth. Chalmers partially attributed the slower growth rate to price pressures resulting from the war in the Middle East.

Foreign investors will face an extended ban on buying Australian homes, with the government saying the measure is aimed at supporting housing supply for residents. The ban will now remain in effect until 30 June 2029.

Property investors will have to navigate highly-anticipated changes to capital gains tax (CGT) and negative gearing tax breaks. Under the new system, negative gearing will be limited to new builds, and the previous CGT discount will be replaced with a discount based on total profits minus inflation.

Trust recipients will pay a minimum 30 per cent on capital gains from trusts from 1 July 2028, in a move that attempts to address tax rate differences that arise when trusts are spread across multiple beneficiaries.

There will also be changes to the permanent migration points test, which affects two-thirds of migrants, with the government prioritising younger and more educated workers.

Read more here:

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Who are the winners and losers of the 2026 federal budget?

— Ewa Staszewska, Josie Harvey

Good morning and welcome to SBS News' federal budget live blog.

Today, we'll be following along with all the reactions and washup after Treasurer Jim Chalmers handed down the Albanese government's fifth budget last night at Parliament House.

The budget contained sweeping tax reforms that Chalmers described as the most ambitious in decades, targeting negative gearing, capital gains tax (CGT) and discretionary trusts — and breaking an election promise not to touch negative gearing and CGT.

It also introduced a new $250 annual tax offset in a move set to benefit over 13 million Australian workers from 2027-28.

The budget documents detail $833.2 billion in spending for the 2026-27 financial year, an increase of $47.5 billion, delivering a projected deficit of $28.3 billion.

Read more about the major changes here:

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Your five-minute guide to the budget: Key changes Australians should know

— Josie Harvey