As you may be aware, the next Australian Budget will be presented by the Treasurer, Jim Chalmers, on 12 May.
Here, you can read about the background to the 2026 Budget, get an idea of what may be announced, and how you can plan for any changes that may be made.
The macro-economic background to this Budget statement
The 2026 Budget will be delivered against a background of challenging economic circumstances.
According to the Australian Bureau of Statistics, over the 12 months to the end of February 2026, the Consumer Prices Index (CPI) was 3.7%, down from 3.8% the previous month.
This is in stark contrast to before the last Budget in 2025, when inflation was 2.4%.
As reported by Trading Economics, the Reserve Bank of Australia raised its interest rate to 4.1% to help bring inflation under control at its March 2026 meeting.
According to the IMF, Australia’s GDP growth rate is now expected to come in at 2% in 2026, down from the previously forecast 2.1%, and 1.7% in 2027, down from 2.2%.
As with many other countries around the world, the Australian economy and short-term economic outlook are being affected by geopolitical events.
In particular, the conflict in the Middle East is driving a significant increase in energy and fuel prices.
In response, Reuters confirms that the government has announced $1 billion in interest-free loans to key commercial sectors affected by price rises.
The Guardian also confirm a reduction in GST on domestic fuel and a reduction in the fuel excise.
Poor current economic figures mean a difficult budget
Given the poor indicators and the challenging economic climate, we anticipate that this Budget is unlikely to announce many significant positive changes.
The general consensus is that the Treasurer will want to create a balance between measures to provide some cost-of-living relief and fiscal discipline.
So, you can probably expect a mix of targeted support, spending restraint, and announcements of longer-term reforms.
Recent announcements strongly suggest continued relief, but any broad stimulus packages are likely to worsen inflation.
You should consider how any changes could affect your personal finances
From a personal financial planning perspective, if, as expected, 2026 comes down to small policy shifts rather than sweeping changes, it is important to consider how these may affect your finances.
Three of the priorities for you to think about are:
- How any changes could affect your ongoing income and expenditure
- Whether you need to make any adjustments to your investment strategy
- Steps you could take to mitigate the amount of tax you are liable for.
For example, any fuel relief could provide a short-term improvement in your monthly cash flow. You may want to consider earmarking the extra money and using it strategically, such as boosting your savings and investments.
There are reports of potential changes to Capital Gains Tax
One potential budget announcement that ABC have flagged up is possible changes to Capital Gains Tax (CGT).
They report that any change will be designed to boost productivity and “lift the speed limit” on the economy, enabling higher growth with lower inflation.
A separate ABC report suggested that CGT reform may relate to investment properties as part of a package of measures around housing reform.
At this stage, such commentary remains speculative, and no premature action is warranted in response to this or other pre‑Budget media reports.
You should wait for the actual statement and make decisions based on your broader financial strategy and long-term plans, rather than make one-off changes in response to rumours of measures that may not actually be announced.
There has been no speculation about any major changes to super
While the Treasurer may spring a surprise, we believe big changes to superannuation are unlikely.
However, it’s always worth being aware of possible changes to contribution caps and tax concessions for substantial super fund balances, perhaps over $3 million.
As any changes are likely to take effect in the 2026/27 tax year, you may want to consider maximising your contributions in the current tax year, subject to your wider financial plans and current priorities.
Also bear in mind that previous super-related Budget announcements (Payday super and Division 296 tax) take effect at the start of the next financial year.
Ultimately, super remains one of the most tax-efficient vehicles and a key component of your financial plans. Still, you should be aware of a possible gradual tightening of the rules around taxation and contribution limits.
Interest rates and inflation are liable to affect your finances more than budget changes.
Even if there are no major changes announced, it’s important not to overlook the effect some of the macro-economic figures you read earlier could have on your finances and planning.
In many ways, these can be more impactful than anything the Treasurer may announce on 12 May.
For example, higher inflation reduces the purchasing power of your money, which will affect all aspects of your day-to-day finances, from your weekly shop to filling up with petrol.
Inflation also makes getting good returns on your investments all the more important for your long-term wealth.
Likewise, interest rates remaining relatively high and potentially increasing affects the cost of borrowing, while at the same time giving you potentially better returns on your savings.
Your financial resilience should remain a long-term priority
Regardless of what is announced, the potential changes in this Budget highlight the importance of focusing on your long-term planning.
Having a plan in place makes reacting to changes easier, as you can amend an existing plan and, as a result, clearly assess how you may be affected.
It also underlines the importance of your financial resilience.
Changes could be negative and have a detrimental effect on your finances, so it’s important to be in a strong position with regard to factors such as:
- The balance between your income and expenditure
- Having suitable financial liquidity, in particular a robust emergency fund
- Investment diversification, so you aren’t overexposed in one particular sector.
After the budget, you should take time to assess how the changes could affect you and whether you need to make any reactive changes.
Get in touch
We will cover any key Budget issues that may affect you in our regular Budget newsletter, which you should receive a few days after the statement is made.
But if you have any particular concerns in the meantime, please get in touch with us.
Please note
These changes are currently only proposals and are subject to legislation.
This article is for information only. Please do not solely rely on anything you have read in this article, and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All content is based on our understanding of ATO legislation and the Budget report, and is subject to change.