CGT Discount Changes Calculator (Budget 2026)
Updated for FY2025-26
Compare the 50% CGT discount (old rules, pre-1 July 2027) with the new inflation-indexed discount plus 30% minimum tax floor announced in the 12 May 2026 federal Budget. Plug in your cost base, sale price, holding period, other income, and CPI assumption to see the differential.
Quick scenario
Small annual sale to fund a year of bridge-phase living. The floor binds hardest in proportional terms here.
The 50% CGT discount under the old rules requires a hold of more than 12 months. Indexation under the new rules also requires a hold longer than one year; shorter holds attract the 30% floor on the full nominal gain.
Wage, salary, distribution yield on the position, or any other assessable income for the year. The decomposition picks up the marginal-rate tax attributable to the gain alone.
The actual ATO indexation formula for the new regime is not yet legislated. This calculator uses a single CPI rate compounded annually as a reasonable proxy. Higher inflation reduces the real gain (and therefore the new-rules tax).
Old rules
$0
50% discount + marginal
New rules
$5,630
Indexed + 30% floor
Change
$5,630
old was $0 (no comparison)
Tax on the gain
Working
- Nominal gain
- $35,000
- Indexed cost base
- $61,232
- Real gain
- $18,768
- Old effective rate
- 0.0% of nominal
- New effective rate
- 30.0% of real
Speculative numbers
Treasury Laws Amendment Act for the 2026-27 Budget CGT changes is not yet registered. The 1 July 2027 effective date, the 30% minimum tax floor, the indexation method, and the pensioner exemption are all announced-not-legislated. The Stage 4b FY27-28 tax brackets used in both calculations are legislated. Numbers shown are illustrative comparisons; the actual mechanic may differ when the Act is registered. Not financial advice.
What the 2026-27 Budget changed
Treasurer Jim Chalmers delivered the 2026-27 federal Budget on Tuesday 12 May 2026. The headline change for Australian investors is that the 50% Capital Gains Tax discount, in place since 1999, is being replaced from 1 July 2027 with an inflation-indexed discount plus a minimum 30% tax floor on the real gain. The budget.gov.au tax-reform page states the headline:
The Government will replace the 50 per cent Capital Gains Tax (CGT) discount with a discount based on inflation and introduce a minimum 30 per cent tax on gains from 1 July 2027.
New-build property investors retain the choice between the old 50% discount and the new inflation-indexed settings at sale. ABC News reports that pensioners and people on income support will be exempt from the 30% floor. That exemption is not in the budget.gov.au tax-reform summary itself, so treat it as indicative until the Treasury Laws Amendment Act is published.
How the calculator works
The calculator takes your cost base, sale price, holding years, other income in the sale year, a CPI assumption, and an optional pensioner toggle. It runs both regimes at FY27-28 Stage 4b tax brackets (the legislated brackets that apply from 1 July 2027). The old regime applies the 50% discount to the nominal gain and taxes the discounted amount at marginal rates with LITO and Medicare Levy phase-ins. The new regime computes the real gain by indexing the cost base at your chosen CPI rate, then takes the larger of marginal-rate tax on the real gain and the 30% floor.
Using FY27-28 brackets on both sides isolates the regime change. Someone realising before 1 July 2027 would actually pay FY26-27 brackets (Stage 4a) rather than FY27-28 (Stage 4b), but the difference between those two years is small relative to the regime change itself.
Where the floor bites hardest
The floor binds when 30% of the real gain exceeds the marginal-rate tax on the gain. That is most likely when other income is low and the gain alone would have attracted bottom-bracket rates. The Lean FIRE bridge-year scenario (small annual ETF sale to fund a year of retirement spend, with no other income) is the textbook case where the floor binds: a $35,000 nominal gain under the old 50% discount sits at or below the tax-free threshold, so old-rules tax is near zero, but the floor pushes new-rules tax to roughly $5,700.
For high earners selling pre-retirement, the picture is different. Marginal already approaches 30% on the discounted amount, and the indexation discount under the new rules partially offsets the loss of the 50% discount. The differential there is smaller, often a few thousand dollars on a substantial gain.
For a closeout (selling the whole position in a low-income retirement year), the result is between the two: marginal can narrowly exceed the floor once LITO and Medicare phase-ins are modelled, so the floor does not literally bind, but the differential is still positive because the inflation-indexed gain is larger than the discounted amount would have been.
What the calculator is not
This is a single-asset, single-year tool. It does not model multi-asset portfolios, jointly-owned assets (run each owner's half separately), HECS/HELP repayments, the Medicare Levy Surcharge, or the full Age Pension means test for pensioners. It uses a single CPI rate compounded annually as a proxy for the new regime's indexation, because the actual ATO indexation formula is not yet legislated.
For end-to-end FIRE planning that puts the CGT decision in the context of your full plan, super, Age Pension, and Monte Carlo sensitivity, use the ProjectFi planner.
Read more
How the 2026 Federal Budget Changes the FIRE Math walks through the three structural changes (CGT, negative gearing, discretionary trusts) and what they mean for Australian FIRE planning, with a worked-numbers comparison across three personas. The methodology page documents how the ProjectFi engine handles multi-FY tax transitions.
Sources
- Australian Government, Budget 2026-27 Tax reform. Source for the 50% CGT discount replacement, the 30% minimum tax, the 1 July 2027 effective date, and the new-build election.
- ABC News, Federal budget 2026: Winners and Losers. Source for the pensioner / income-support exemption from the 30% floor.
- ATO, Capital gains tax. Source for the current 50% discount rules and CGT event A1 timing.
- Treasury Laws Amendment Act 28/2025 (Stage 4b brackets, legislated FY27-28 tax rates).
FAQ
- What is the 30% minimum tax floor?
- The 2026-27 federal Budget announced that from 1 July 2027 the 50% CGT discount for individuals will be replaced by an inflation-indexed discount, with a minimum 30% tax on the real gain. If your marginal-rate tax on the real gain would have been less than 30% (typically in a low-income retirement year), the floor lifts it to 30%. If marginal already exceeds 30%, marginal applies and the floor does not bind. The floor is the policy lever that stops investors from timing sales into low-income years to access bottom-bracket marginal rates.
- When does this change take effect?
- The Budget paper says gains arising before 1 July 2027 keep the 50% discount, and gains from that date forward use the new inflation-indexed plus 30% floor regime. The Treasury Laws Amendment Act for this measure has not been registered as of 13 May 2026, so the precise effective date and mechanic may shift slightly when the legislation is published. The calculator uses 1 July 2027 because that is the date stated on budget.gov.au.
- Does the pensioner exemption apply to me?
- ABC News reports that pensioners and people on income support will be exempt from the 30% floor. The budget.gov.au tax-reform summary page does not itself list this exemption, so treat it as indicative until the legislation is registered. The toggle in this calculator is narrowed to Age Pension recipients specifically, because the calculator also flips Medicare Levy to the SAPTO threshold when the toggle is on, and SAPTO eligibility is narrower than all income-support recipients (SAPTO mostly covers people 65+ on the Age Pension). If you receive a different income support payment (JobSeeker, Parenting Payment, etc.), the announced floor-exemption framing may still apply to you, but this calculator does not model that case; check with your accountant when the legislation is registered. Note: the exemption only changes the outcome when the floor would otherwise have been the binding constraint. If your marginal rate on the gain already exceeds 30%, toggling the exemption changes nothing.
- Why does this calculator show different effective rates for old vs new?
- The old rate is shown as tax divided by nominal gain (what you actually pocket). The new rate is shown as tax divided by real gain (the indexed amount the new regime taxes). They have different denominators on purpose. Showing both lets you see the structural change rather than a single composite headline.
- What happens if I sell before 1 July 2027?
- Gains crystallised before 1 July 2027 keep the 50% discount under the old rules. The contract date controls (per ATO CGT event A1 timing), not the settlement date. If you were planning a sale in late 2027 or 2028 and the timing flexibility exists, pulling the contract date before 1 July 2027 keeps you in the old regime. This is not advice to time a sale; the decision to realise should be driven by your overall plan, not by tax timing alone.
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