As the 2026 federal budget approaches, the government prepares to balance economic volatility with potential reforms to capital gains tax and negative gearing.

The yearly budget comes amid a period of heightened uncertainty for Australia and the world as the war in the Middle East continues to rattle global markets and puts pressure on inflation.. While it won’t be formally announced until Tuesday evening, the budget is widely expected to include controversial reform to Australia’s capital gains tax discount and negative gearing.. Anthony Albanese has not officially confirmed the plan but has indicated further reform despite promising ahead

of the 2025 election that neither the tax, known as CGT, nor negative gearing would be changed.. The Prime Minister told the Labor Caucus on Monday in a pre-budget pep talk that “a responsible government need(s) to be prepared to make tough decisions”.. “Average wage earners had carried an increasing share of the tax burden and young people have felt that it is stacked against them”, a source told The Australia.. “He said with housing,

we will boost supply while delivering intergenerational equity.” Other measures include an expected one-time stimulus of between $200 to $300 for every Australian who gets a wage or salary and pays tax.. Several announcements have also already been made, including a massive uptick in defence spending over the next decade, a new national counter-terrorism centre, and big cuts to the NDIS.. An extension to the fuel excise – slashed when the Iran war sent prices

spiralling – is also understood to be potentially included.. Better bottom line forecast The budget bottom line is expected to be $44.9bn stronger than forecast in December, and more than $250bn stronger than what the Albanese government inherited when it was first elected in 2022.. The budget is expected to show that deficits are lower in every year compared to both the mid-year budget update in December and what the Albanese government inherited in 2022..

The bottom line is forecast to be $263.8bn better than what was inherited that year.. That is driven by a further $63.8bn in savings and reprioritisations.. Finance Minister Katy Gallagher said the government had made “responsible decisions” to improve the budget while continuing to invest in services.. “We’ve found almost $180bn in savings and reprioritisations since coming to government, helping put the budget on a stronger footing,” she said.. The government has been under fire

for its spending, with some economists and the opposition accusing it of fuelling inflation, which has risen to 4.6 per cent – well above the Reserve Bank’s target of between 2-3 per cent.. The RBA last week increased the official cash rate for the third time this year, pushing it to 4.35 per cent.. More to come

Budget 2026, capital gains tax, negative gearing, Anthony Albanese, Australian economy, inflation, federal budget