A straightforward but pressing concern is being raised by households, property owners, and investors as Australia prepares for tax changes set to take effect on July 1, 2026: will these changes relieve strain on household budgets and real estate markets, or will they merely shift responsibilities and competitiveness around? The federal Budget has promised increased tax relief for taxpayers in 2026 and additional benefits in 2027; however, more significant structural reforms (such as negative gearing and essential CGT adjustments) are still up for political debate.  

In the meantime, Perth’s housing market is still doing well: median dwelling values have increased significantly in 2025, and vacancy rates have tightened in comparison to pre-pandemic norms. These developments will influence how tax adjustments affect sellers, buyers, landlords, and renters in Western Australia.

New tax cuts for every Australian taxpayer

All Australian taxpayers will receive additional tax breaks from the government in 2026 and 2027. This completes the first wave of tax cuts implemented by the government since July 2024.

To sustainably maintain fiscal settings consistent with inflation, the government will implement these new tax cuts over two years.

• The 16% tax rate, which applies to taxable income between $18,201 and $45,000, will drop to 15% as of July 1, 2026.
• This tax rate will be further lowered to 14% on July 1, 2027.

Helping Australians keep more of what they earn

People will have more money thanks to the government’s recent tax cuts.

• Compared with 2024–2025 tax arrangements, an average worker will receive a new tax cut of $268 in 2026–2027 and $536 annually in 2027–2028.
• In comparison to 2023–24 tax settings, they will receive a total tax savings of $1,922 in 2026–27 and $2,190 each year from 2027–28 when combined with the first round of tax cuts.
• The average yearly tax savings for all taxpayers in 2027–2028 is projected to be $2,548, or almost $50 per week.

A. Building a stronger economy

1. People can keep more of their earnings thanks to the government’s combined tax cuts, which will increase nominal household disposable income by 1.9% by 2027–2028.

2. Compared with 2023–2024 tax settings, the government’s overall tax cuts are expected to boost labour force participation by increasing total hours worked by almost 1.3 million per week, or more than 30,000 full-time jobs.

3. Women are primarily responsible for this rise; compared to 2023–2024 tax conditions, they are predicted to increase their labour supply by 900,000 hours.

B. More relief from energy bills

1. Every home and about a million small businesses will receive energy bill assistance from the government through the end of 2025.

2. In addition to the approximately $5 billion in bill assistance already provided, the government will make an extra payment of about $1.8 billion.  

3. By December 31, 2025, every home and approximately 1 million small businesses will receive two direct $75 reimbursements on their electricity bills.

4. Electricity rates have already decreased by 25.2% in 2024, thanks to relief from state and federal energy bills. It is anticipated that the increased Commonwealth rebates will keep prices under pressure to decline.

C. Reducing non-compete agreements to increase pay and mobility

1. Non-compete agreements that limit their ability to change jobs and drastically reduce salaries affect one in five workers.  

2. The government’s decision to outlaw these clauses for low- and middle-class workers is expected to increase earnings by enabling them to transition to higher-paying, more productive positions.

D. Financing pay raises for child care and elder care providers

1. The government continues to support the aged care workforce in this budget by allocating $2.6 billion for additional wage increases for aged care nurses, effective March 1, 2025.  

2. As a result, the sector has invested $17.7 billion in salary hikes. Additionally, the government is spending $3.6 billion to promote a historic pay rise for workers in early childhood education and care.  

3. Compared with current award rates, this will result in a 10% increase starting in December 2024, followed by an additional 5% increase beginning in December 2025.

E. Reducing the price of medications

1. For all Medicare cardholders without a concession card, the government is reducing the maximum cost of medications on the Pharmaceutical Benefits Scheme (PBS).

2. The highest copayment will drop from $31.60 to $25.00 per script on January 1, 2026—the lowest amount in 20 years—and stay fixed at $7.70 for retirees.

3. For general non-Safety Net patients, four out of five PBS medications will become less expensive; the savings will be greater for drugs that qualify for a 60-day prescription.

4. The PBS is investing $1.8 billion to list new medications, such as oral contraceptives and therapies for menopause, cancer, endometriosis, and treatment-resistant severe depression. The government has approved 319 new or modified PBS listings since July 1, 2022.

F. Reducing student loan debt

1. Three million Australians will have their student loan debt reduced by $19 billion, thanks to government reforms that will also improve the fairness of the student loan repayment system.

2. Subject to legislation, the government will reduce all outstanding student debts, including those from the Higher Education Loan Program (HELP), by 20%. As a result, $16 billion will be taken out of the accounts of three million Australians.

3. The recent change to make indexation arrangements more equitable, which limited future indexation and retroactively reduced the indexation applied in 2023 and 2024, has already reduced student loan debt by $3 billion. This is in addition to the 20% reduction.

4. Subject to legislative enactment, the government plans to change the student loan repayment system on July 1 of this year. Additionally, the government will raise the threshold for loan repayment from $54,435 in 2024–2025 to $67,000 in 2025–2026.

5. Under the new system, no one will pay more, and those who earn more than the current minimum level and less than $180,000 will be required to make smaller repayments.

A better deal for consumers

1. The Australian Competition and Consumer Commission (ACCC) will receive an additional $38.8 million in government funding to combat deceptive pricing practices and unethical behaviour in the grocery and retail industries.

2. To help fresh produce suppliers uphold their obligations under the Food and Grocery Code of Conduct, the government is allocating $2.9 million. The government has mandated the code and established multimillion-dollar fines for supermarkets that violate it.

3. As agreed under the revitalised National Competition Policy, the government has given states and territories $240 million to liberalise, streamline, and standardise their commercial planning and zoning laws and procedures to facilitate the opening of new supermarkets.

4. To lessen the burden of living expenses and enhance food security, the government is also lowering the prices of 30 necessities, including milk, fruit, vegetables, and nappies, at stores in isolated First Nations settlements.

Fighting frauds, unfair tactics, and outrageous surcharges

1. To provide customers with a better deal at the register, the government is taking action against unjustly high card surcharges. Subject to additional RBA work and protections to ensure that consumers and small businesses can benefit from lower payments, the government is ready to outlaw debit card surcharges.

2. The government will also collaborate with state and territory governments to enact prohibitions on unfair business practices and give regulators the authority to prosecute companies that violate the Australian Consumer Law by failing to offer remedies.

3. The National Anti-Scam Centre will receive $6.7 million in funding for 2025–2026 to continue safeguarding Australians against fraud. This builds on the more than $180 million the government has spent on various anti-scam programs since 2022–2023, resulting in an annual reduction in scam losses of more than $1 billion.

What the federal government has actually done (short-term, specific measures)

1. In contrast to 2024–2025 settings, taxpayers are expected to receive additional minor tax cuts starting on July 1, 2026, and a higher cumulative reduction beginning on July 1, 2027, according to the government budget for 2025–2026.  

2. In addition to outlining steps to reduce energy costs and other cost-of-living assistance, the government’s fact sheets describe the incremental relief. Although the headline tax reductions are minimal per taxpayer, these changes are intended to assist with the income spectrum.

3. Headline tax cuts raise disposable income overall, but the exact amount depends on an individual’s income, deductions, and household makeup.Even modest relief can help households under pressure to pay off their mortgages. Still, it won’t necessarily undo years of cost increases driven by rising housing prices, rents, and living expenses.

What the government has not yet fixed — the big structural questions

1. The importance of negative gearing, the 50% capital gains tax (CGT) reduction, and whether these concessions should be restricted, curtailed, or modified are topics of current policy discussion across the country.

2. As of this writing, neither the 50% CGT discount nor significant modifications to negative gearing have been included in the Budget as broad changes. There have been proposals and consultations in public discourse, but a substantial shift in both long-standing settings is still politically questionable.

3. The top negative gearing and CGT concessions that underlie investor conduct remain materially in place as policy debate continues. The Treasury and the Parliament have debated proposals affecting foreign-resident CGT laws, and some deferrals/clarifications have been announced.

4. Two of Australia’s main incentives for investing in real estate are negative gearing and the CGT reduction. Investor demand, rental supply, rental costs, and property prices would all be affected by any significant change. Even if reforms are postponed, the possibility of reform may still affect market mood.

Perth market snapshot — prices, rentals, supply (what’s actually happening on the ground)

1. The Perth market grew stronger in 2024 and 2025. In comparison to many other cities, there is significant momentum and actual price increases from October 2025 to October 2025, according to several data sources:

• Perth’s median housing values and home prices have increased through 2025; according to national index providers, Perth has been one of the better performers with consistent monthly and annual rises.
• For example, national indicators showed a robust monthly read in October 2025, with a notable increase in Perth.
• The most localised benchmark for WA transactions as of October 2025 is provided by local REIWA median price reporting (Perth metro data), which displays median price levels and is up to date with the most recent resolved transactions.  
• Depending on dwelling type and location, these local medians indicate that Perth home prices are in the upper $700k to $900k range.
• In the rental market, vacancy rates tightened following the pandemic recovery and improved (i.e., decreased) towards or below the “balanced” zone (about 2.5–3.5%) in a few months of 2024–2025 and into 2025.  
• According to REIWA, early in 2025, Perth’s vacancy rate approached historic balanced-conditions levels. This indicates that rental demand remains strong in many Perth suburbs.

2. The distributional impact of any tax adjustments is increased by growing real estate costs and limited rental supply. For example, minor personal tax cuts boost household spending power.

3. Still, in Perth, where home prices have skyrocketed, those cuts are unlikely to materially reduce mortgage stress for highly leveraged homeowners or significantly lessen housing cost pressure for tenants without concurrent supply-side measures.

Macro context — the economy, wages and inflation

1. Australia’s national accounts for 2024–2025 reveal shifting household saving habits and weak GDP growth. The amount of a tax cut that winds up as more mortgage repayments or discretionary expenditure depends on household saving ratios and income growth trajectories.

2. GDP growth has been positive but modest throughout 2024–2025. Bracket creep, or people shifting into higher tax brackets without brackets being adjusted, can gradually erode tax advantages if wages and incomes rise faster than brackets are adjusted.

3. This is a significant reason why analysts emphasise the need for structural reform rather than just one-time relief. Whether incomes and prices continue to rise in 2026 will significantly affect the net household benefit from the tax adjustments.  

4. A longer-term policy problem is that some tax gains will be lost to bracket creep if wages and inflation drive nominal earnings upward without matching indexation of tax rates.

How the 2026 tax changes will play out for Perth homeowner segments

1. Owner-occupiers (homeowners with a mortgage)

A small personal tax cut will directly result in a modest rise in after-tax income, which many mortgage holders will use to reduce debt, balance their budgets, or pay for rising expenses.  

That is beneficial, but if interest rates rise again, the relief (a few hundred dollars up front for many taxpayers in 2026, with higher amounts by 2027) is unlikely to offset a significant mortgage rate shock.

If the market keeps growing (as Perth’s 2025 trend suggests), price increases may outpace tax breaks, putting pressure on homeowners — especially first-time homebuyers — to maintain affordability.

Action for Bargoti Real Estate clients (owner-occupiers):

• Reassure current owners that tax relief is designed to ease cash flow, but plan finances assuming rates could move.
• Offer tailored mortgage-stress scenarios in property valuations and buyer advice packages, showing how modest tax relief affects borrowing capacity under different interest-rate paths.

2. Investors and landlords

Investors will keep a careful eye on two issues:

• The narrowing of negative gearing and CGT concessions
• The continued strength of rental demand (vacancy, rents)

Negative gearing and the 50% CGT discount have not yet been eliminated or phased out. However, there are ongoing discussions and ideas (such as limitations or gradual modifications) on the public agenda.

Investor decisions are influenced by the uncertainty itself, which can occasionally delay purchases or direct investors towards assets that seem less politically risky (such as commercial, short-stay conversions or properties under superannuation arrangements).

Landlords can anticipate stable leasing prospects, according to Perth-specific rental signals (vacancy tightening). Still, a potential policy change to concessions (if approved in the future) would be a significant turning point.

Action for Bargoti Real Estate clients (investors/landlords):

• Re-evaluate cashflow stress tests without assuming future concessions: ensure investments can survive if tax advantages are reduced.
• Consider a mix of short- and long-term holdings, and evaluate rental demand at the suburb level (inner-city vs. outer suburbs).
• If you manage properties, document unit-level improvements that justify modern rents (quality fitouts, energy efficiency)—in Perth’s tightening rental market, quality lifts valuation and leasing speed.

3. Tenants and first-home buyers

Tenants face a market where high-quality houses lease fast since Perth’s vacancy rate is close to the historically balanced range (and rental demand is holding in key suburbs).  

Government first-home buyer aid programs continue to play a significant role in home-buying decisions, and tax cuts for low- to middle-income workers may help some tenants save for deposits. However, while attempting to climb the housing ladder, minor tax offsets become less efficient as median prices rise.

Action for Bargoti Real Estate clients (renters/first-home buyers):

• For first-home buyers: provide straightforward calculators that show how tax cuts, combined with state/federal first-home assistance and deposit-saver plans, affect borrowing power in Perth suburbs.
• For tenants: highlight rental-reporting tools and suburbs where vacancy and value trends make long-term renting a cost-effective option.

The investor question: will tax cuts stimulate more purchases — or will policy risk dampen them?

Reductions in personal income taxes raise disposable income, which can increase financing capacity for buyers with a sizable deposit. Nevertheless, there are two opposing dynamics at work:

• The cuts aren’t a significant lever for purchasing decisions on their own because they are small in comparison to typical deposit/mortgage amounts.
• Investor caution may result from policy uncertainty around prospective future negative gearing or CGT reform.  
• Limits (such as limiting concessions to a single investment property or phasing modifications) have been proposed in discussion papers, union proposals, and some policy circles; even if they are not implemented, they still influence public opinion.  
• Uncertainty persists even though policymakers have postponed some actions or indicated they will consult rather than make quick adjustments.
• Modest positive for buyer confidence from cashflow improvements, but tempered by lingering policy risk.

Tax specifics that matter to property owners today (practical primer)

The primary tax factors that investors and property owners should consider when making plans for 2026 are listed below:

1. Personal income tax rates

• Beginning in mid-2026, the government’s planned reduction will affect the marginal rates for lower-income bands.
• To understand changes in net cash flow, examine your client’s marginal rate following the revisions.  
• For precise computations, the ATO’s tax rates and criteria for the 2025–2026 fiscal year should be examined for technical reference.

2. Capital Gains Tax (CGT)

• Many people and trusts that have held assets for more than a year are still eligible for the 50% CGT discount.
• However, publicly publicised suggestions and reforms aimed at foreign-resident CGT laws may alter the effective taxation of profits for certain owners in the future.  
• It is still crucial to conduct CGT sensitivity scenarios when advising clients on exit preparation.

3. Negative gearing

• Now accessible to a large number of landlords, the suggested modifications are being actively explored but remain speculative (which matters for future investment returns).  
• Create cautious cash flow models that don’t rely solely on tax breaks.

4. Foreign investor rules

• Tightening the foreign-resident CGT regime has received recent budgetary and legislative attention
• If you manage or deal with properties with foreign ownership or trusts, be mindful of compliance and timing adjustments.

Perth-specific scenarios — what could happen in 2026 (3 plausible outcomes)

Three possible tax consequences are listed below, along with how each would manifest in Perth’s markets. These are meant to assist Bargoti Real Estate in preparing customers; they are scenario-based, not forecasts.

1. Scenario A — “Measured Relief” (Base case)

• There are no immediate adjustments to negative gearing or CGT, and the expected 2026 tax cuts go ahead as promised.
• Household cash flow improves slightly, and buyer confidence increases slightly.
• Demand in Perth remains stable, prices are rising somewhat, and rental markets in high-demand suburbs are tightening.
• More transactions, consistent rental yields, and sustained high demand for high-quality listings are the implications for Perth.
• Bargoti should prioritise listings of well-presented residences, and valuation changes should reflect the increased demand.

2. Scenario B — “Supply-side squeeze & political reform risk”

• Political pressure results in targeted change (e.g., restrictions on concessions for specific investor cohorts, such as short-stay homes, or tailored CGT/treatment for foreign owners) following modest personal tax relief.
• As investors reevaluate their holdings, investor demand changes, and short-term supply tightens.
• Depending on the program’s details, rents may increase in the short term if short-stay/Airbnb stock shifts to long-term or vice versa.
• More volatility and some investors selling in impacted niches are implications for Perth, but long-term owner-occupier demand is still high.
• Bargoti should collaborate with accountants to organise exits and holds and provide sellers with clear tax-impact guidance.

3. Scenario C — “Broad reform” (lower probability in the near term)

• The government implements extensive changes to the CGT discount and negative gearing (or adjusts tax brackets in a way that shifts revenue burdens).
• Rents may initially increase if investors sell holdings, the market responds swiftly, investors face lower after-tax returns, and certain forced sales increase supply.  
• First-home buyer access could eventually be improved by reconfiguring supply to make more stock available for owner-occupation, but the transition would be disruptive.
• Long-term increased affordability if supply is unlocked, short-term price adjustments in investor-heavy regions, but transitional hazards for lenders and landlords.
• Bargoti should provide frameworks for portfolio stress testing and crisis management.

Practical checklist for Bargoti Real Estate and its clients (what to do now)

1. Tax-impact one-pagers — produce short, suburb-specific briefs that show how the 2026 tax cuts translate to monthly cashflow changes for different household types (single income, dual income, investor with negative gearing). Use ATO rates and local median price/rent data when illustrating scenarios.

2. Stress-test calculators — provide simple calculators for clients that run “what if” scenarios: interest rate +1%/-1%, tax cut only, tax cut + bracket creep, negative gearing removed for second property, etc.

3. Investor education sessions — host webinars for landlords on restructuring property portfolios, tax planning with accountants, and non-tax ways to increase returns (capital improvements, energy-efficiency upgrades to attract tenants).

4. Communication for first-home buyers — develop guides that combine tax cut effects with first-home buyer schemes and local median prices to show realistic entry strategies in Perth suburbs.

5. Valuation and sales guidance — adjust comparable-based valuations to incorporate recent price momentum; provide clear commentary to vendors about how tax changes and broader macro factors may influence buyer pools.

6. Track policy signals — create an internal “policy watch” (weekly brief) summarising any new Treasury, ATO, or Parliamentary developments on negative gearing/CGT/foreign-resident CGT measures so agents can respond quickly.

Messaging: How Bargoti Real Estate should talk to buyers, sellers and landlords

1. To buyers: honest, data-driven messaging — shows how small tax relief helps but does not replace the need for deposit planning and rate sensitivity. Provide local median price trends and time-to-sell metrics to highlight market windows.

2. To sellers: explain that markets remain active; modest tax relief can widen buyer pools, so well-priced, well-presented homes still attract competition.

3. To landlords/investors: stress testing, diversification and clarity on policy risk. Offer referral pathways to trusted tax/accounting partners for personalised planning.

Longer-term tax reform — what to watch beyond 2026

1. Any formal proposals to limit negative gearing or the CGT discount (including parliamentary committee reports, Treasury consultation papers and PBO modelling). These proposals are the key structural risk to investor returns.

2. Indexation of tax brackets (or lack thereof) — bracket creep can erode tax gains over time if brackets are not indexed.

3. Foreign-resident CGT changes — these affect cross-border investors and can influence particular suburbs with higher foreign investment.

4. State/Local supply-side changes — housing supply levers (zoning, approvals, infrastructure) will often be the more powerful determinants of long-term affordability; tax changes alone rarely fix supply constraints.

Final assessment — relief or pressure?

Short answer: both, depending on the lens.

• For many households, the 2026 personal tax cuts will provide modest, welcome relief in cash flow and real income — a helpful but not transformational change.
• For the Perth property market, the 2025–26 momentum (rising medians, tight vacancies) means slight tax relief is unlikely to make housing significantly more affordable without simultaneous, large-scale supply measures or major tax reform that discourages speculative investor demand — reform that is possible but politically fraught and not guaranteed in the short term.
• The single most significant risk for investors and market stability remains policy uncertainty over negative gearing and CGT concessions. Even silent debate — proposals, union campaign pressure, or consultation leaks — increases holding risk and can change investor behaviour before laws change.

2026 brings targeted relief for taxpayers, but structural pressure on affordability in high-demand markets like Perth will continue unless supply-side measures and/or decisive policy choices (and clarity on investor concessions) change the long-term dynamics.

DISCLAIMER – The information and opinion provided is for guidance and general informational purposes only. The sole intention is to provide general understanding of the subject matter so the readers can assess whether they need more detailed information. The information provided on this website should not be regarded as a financial, business, legal or real estate advice and it is strongly recommended that the readers should seek their own independent financial, business, legal or real estate advice. While every effort has been made to ensure that the information and the material is correct and up to date at the date of publication. However, we do not guarantee or warrant the accuracy or completeness of the information provided as the factors like changes in circumstances after the time of publication, may impact such accuracy or completeness. Bargoti real estate will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.