Federal Budget 2026 – What it Means for Salary Packaging and Novated Leasing
The Federal Government delivered a budget on Tuesday, 12 May 2026 that was headlined by tax relief for workers, fuel measures, and housing reforms. Here we run through the potential impacts for salary packaging and novated leasing customers.
Electric vehicles
Some proposed changes to the Electric Vehicle (EV) discount were announced.
Current settings will remain unchanged until 31 March 2027. From 1 April 2027, EVs costing below $75,000 will remain fully fringe benefits tax (FBT)-discounted, while a 25% FBT reduction will apply to vehicles priced between $75,000 and $91,387.
From 1 April 2029, all EVs costing up to $91,387 can get the 25% FBT discount – which will remain the policy thereafter. Read our article for more information on the phased changes.
If you already have a novated lease on an eligible EV, your existing arrangement will be honoured for the life of the lease.
We are waiting on clarity regarding EV Discount exclusions for changes to novated lease contracts – we will communicate this once we know.
Tax cuts
The government announced an annual tax cut of $250 to commence from 1 July 2027.
This tax cut is in addition to those previously announced: a reduction in the tax rate for earnings between $18,201 and $45,000 from 16% to 15% from 1 July 2026, and then to 14% from 1 July 2027.
These cuts are expected to have minimal material impact to salary packaging arrangements for most of our customers. Visit our Salary Packaging Calculator from 1 July for your updated estimated tax savings.
Proposed $1,000 instant tax reduction
Still at draft legislation stage pending stakeholder review, a new instant tax deduction of up to $1,000 has been proposed from 1 July 2026, to simplify work-related expense deductions and save millions of Australians time and money at tax time.
What happens next?
There is nothing you need to do; you can continue with your salary packaging and novated leasing as normal. We are in the process of clarifying some of the reforms and will communicate any impacts as soon as information is available.
We’re here to help
If you have any questions about your salary packaging or novated leasing arrangements, please contact us.
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