A Simple Guide to the 2026 Cost-of-Living Budget

Topic: Cost of Living

The federal budget aims to help with the cost of living in Australia.

Another federal budget has been announced.

The government wants to help Australians with the cost-of-living crisis.

The crisis in the Middle East is making life harder for Australians.

The government is trying to reduce the impact of global price rises.

For the latest budget updates, check our blog.

The budget includes measures to help Australians with the cost of living.

Here's a quick guide to the cost-of-living relief.

Workers will get a $250 tax offset.

The government is introducing a new tax cut for Australian workers.

The Working Australians Tax Offset will provide up to $250 per year.

This will increase the tax-free threshold for workers.

Over 13 million Australian workers will benefit from this.

The tax offset will help workers keep more of their earnings.

Combined with other tax cuts, workers will get a significant tax reduction.

There's also a $1,000 instant tax reduction.

From 2026-27, workers can deduct up to $1,000 without receipts.

This will simplify work-related expense deductions.

Workers will save time and money at tax time.

The deduction will deliver an average tax saving of $205.

The cost-of-living crisis is made worse by the Middle East war.

Taxpayers can still claim more than $1,000 in work-related deductions.

Charitable donations and other deductions can still be claimed.

There are extra tax cuts.

More tax cuts will arrive in 2026 and 2027.

The 16% tax rate will be reduced to 15% from July 1, 2026.

From July 1, 2027, the rate will drop to 14%.

How much will the average Australian save with the government's tax benefits?

The combined benefit of the tax cuts and offset will be up to $2,816.

The tax cuts and offset are equivalent to up to $54 back in the average earner's pocket each week.

The average income earner will see a tax cut of $268 in 2026-27.

The total tax cut from 2027-28 onward will be $2,190 per year.

The tax cuts will provide cost-of-living relief.

An Australian worker on average earnings will pay up to $38,977 less tax.

The Medicare levy low-income threshold will increase.

The government will increase the threshold by 2.9% from the 2025-26 income year.

Over 1 million Australians on lower incomes will benefit.

The WATO will provide an annual tax offset of up to $250.

Medicines will be cheaper.

The government is investing $5.9 billion in the Pharmaceutical Benefits Scheme.

The maximum general co-payment will be reduced to $25.

The budget will also subsidize COVID-19 oral antiviral medicines.

The Budget Explained

Topic: Federal Government

Analysis by Annabel Crabb

Analysis by Ian Verrender

Other cost-of-living measures

It's hard for people to buy homes in Australia.

But there's some relief for prospective homeowners.

The government is reforming negative gearing and capital gains tax concessions.

The government has delivered a $2.9 billion package to reduce fuel excise.

The rate of excise on petrol and diesel has been reduced by 32 cents.

The Paid Parental Leave Scheme will be expanded to six months.

Families will be $14,000 better off than they would have been in 2022.

The government has invested $11.4 billion to incentivise bulk billing.

The goal is to ensure nine out of 10 GP services are bulk-billed by 2030.

Keytruda has been listed on the PBS to treat cervical cancer.

The government is investing $2.7 million to list new items on the Medicare Benefits Schedule.

The government will permanently fund the Public Dental Services for Adults agreement.

The public dental fund is for low-income adults.

What's in the budget for pensioners?

There are no specific measures for people on the age pension.

But there are two key items that could have an impact:

The government will list the RSV vaccine on the National Immunisation Program at no cost.

The government will invest $3.7 billion to deliver more beds and better care for older Australians.

The government argues that this will re-establish fairness between generations.

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