What the Federal Budget 2026 means for students in Australia
The 2026-27 Federal Budget includes cost-of-living relief, housing and skills funding that directly affects Australian students.
Australia is dealing with a cost-of-living crisis. Many Australian students are feeling its effects, struggling to manage rent and transport costs while balancing study and part-time work.
The 2026–27 Federal Budget introduces several measures aimed at easing financial pressure while also investing in the future of housing, healthcare, skills, and job opportunities.
Below is a breakdown of the key measures and what they may mean in practice for students.
Support for working students
Many students rely on part-time or casual work to cover education and living expenses. The Budget introduces two measures that may benefit working students in the financial year 2027-2028:
- $250 Working Australians Tax Offset: A direct reduction in the tax you owe (outside of taxable income), meaning eligible workers keep an extra $250 during tax time
- $1,000 instant tax deduction for eligible workers: Eligible workers can claim a $1,000 deduction for work-related expenses to offset employment income without the need to itemise expenses or keep receipts
These initiatives are designed to allow working Australians to retain more of their earnings.
Some students who are earning income from part-time or casual employment will qualify for these tax cuts. Eligibility criteria apply, and students should check the Australian Taxation Office website to confirm whether they qualify.
Investment in skills and future careers
The Federal Budget commits AUD $9.4 billion through the National Skills Agreement from 2026–27 to 2029–30, directed at vocational and higher education training across a range of industries.
Sectors identified as priority areas for investment include:
- Technology and artificial intelligence
- Healthcare and aged care
- Renewable energy
- Advanced manufacturing
Whether this investment translates into better employment outcomes will depend on how funding is distributed and how quickly training programs can respond to industry demand.
Housing affordability remains a significant challenge
Housing affordability remains one of the most pressing issues facing students and young Australians, and the Federal Budget partially addresses the issue.
According to Anglicare Australia's 2025 Rental Affordability Snapshot, just 0.7% of rental listings were affordable for minimum wage earners nationally, while no rentals surveyed were affordable for a person receiving Youth Allowance. Separate reporting has suggested an income of approximately $130,000 per year is needed to comfortably rent an average unit in many parts of the country.
To help increase housing supply, the Federal Budget allocates $2 billion for local housing infrastructure, with support for up to 65,000 new homes nationally.
While increased supply may ease pressure in major cities over time, these measures are unlikely to deliver meaningful relief in the short term, particularly for students in high-demand rental markets. Arguably, increasing taxes on investors will not provide the magic bullet that is required to reform housing. Many economists, developers, and business groups argue that addressing Australia's housing shortage requires broader measures such as rezoning around transport hubs, more efficient planning approval processes, infrastructure investment tied to new housing development, and stronger disincentives for speculative land banking.
Healthcare access and student wellbeing
The Budget includes several measures intended to improve access to affordable healthcare, including permanent Medicare Urgent Care Clinics, lower medicine costs through the Pharmaceutical Benefits Scheme, and expanded Medicare support more broadly.
For students managing financial stress alongside study commitments, improved access to low-cost healthcare services may reduce one barrier to seeking support when it is needed.
Students seeking healthcare support can find more information at Services Australia Medicare information.
Lower fuel costs could help ease everyday expenses
One of the most immediate measures announced before the Federal Budget is a temporary reduction in fuel excise, intended to help Australians manage higher petrol prices linked to global supply disruptions.
For students who commute to Sydney, Melbourne, Brisbane, or Adelaide campuses, travel to placements or internships, or live in outer suburban and regional areas, transport can be a significant weekly expense. A three-month fuel excise reduction may offer some short-term relief, though the temporary nature of the measure means longer-term commuting costs remain uncertain.
Students can read an overview about the Federal Budget measures here.
Capital gains tax changes could limit future opportunities for young Australians
Aside from providing some immediate economic relief to students and young Australians, arguably the budget will make it harder for young people to build wealth and achieve financial security in future. Notably, the changes to capital gains taxation could disproportionately affect younger investors. Higher taxes on investment gains mean younger Australians could lose a substantially larger share of their long-term wealth, further limiting their ability to get ahead amid rising housing and living costs.
The budget may also have broader consequences for employment opportunities and economic mobility. Critics suggest that higher taxes on growth-focused investments could discourage investment in Australian companies.
If investors and startups increasingly look overseas for more favourable financial conditions, it will limit innovation, reduce job creation, and weaken opportunities for young Australians seeking to establish careers in emerging industries. These changes contribute to concerns that younger Australians may face greater barriers to “getting ahead” than previous generations.
2026-27 Federal Budget measured outlook
The 2026–27 Federal Budget addresses some of the financial pressures facing students today, particularly around cost-of-living relief and longer-term workforce development. However, several of the headline measures are temporary, modest in scale, or unlikely to produce immediate results in areas like housing.
Disclaimer: Torrens University does not warrant, endorse, guarantee, or assume responsibility for the accuracy or reliability of the information given. The information is intended to be general and educational in nature.
