Australia’s 2025–26 Final Budget Outcome showed tax receipts of AUD 704.2bn, equivalent to 24.1% of GDP, while the underlying cash Deficit came in at AUD 22.3bn. The fiscal figures arrived as Inflation remained elevated and the Reserve Bank of Australia raised the cash rate to 4.60% on 29 September 2026.

The numbers behind the argument

Treasurer Jim Chalmers has been defending the federal government's tax settings after the release of the 2025-26 Final Budget Outcome, which showed tax receipts at 24.1 per cent of gross domestic product. The document, published in late September 2026, put total tax receipts at $704.2 billion, compared with the 23.6 per cent of GDP estimated in the 2026-27 Budget.

The same Treasury outcome showed an underlying cash deficit of $22.3 billion, or 0.8 per cent of GDP, which is $6.0 billion better than the Budget estimate of $28.3 billion. Total receipts were $764.4 billion, or 26.1 per cent of GDP.

What the Treasurer said

Mr Chalmers discussed tax receipts as a share of GDP, stating that they remained below levels recorded under previous administrations. He also said tax cuts already delivered affected the overall ratio. These are the Treasurer's statements rather than independent Treasury conclusions.

On tax cuts, the multiple media reported him saying cost-of-living relief in the form of tax cuts, more bulk-billing, higher wages and help for first-home buyers was "so important". He also argued that Unemployment did not need to rise to bring inflation down, saying it was "possible to have low and steady unemployment at the same time as we see inflation moderate to more normal levels".

Where the extra Revenue came from

The Final Budget Outcome's statement records that income tax Withholding as a share of GDP fell from 11.0 per cent in 2023-24 to 10.8 per cent in 2025-26, which it links to tax cuts for every taxpayer. That supports the Treasurer's description of tax cuts, but the statement does not by itself settle whether the overall tax burden is high or low.

The Nightly reported that Personal Income tax was $366.5 billion, about $2.3 billion above forecast, and that Superannuation fund tax was $35 billion, $1.9 billion above forecast. It quoted Mr Chalmers saying the improvement in receipts was "overwhelmingly from higher super and investor income", rather than from commodities or wage earners. That is his own assessment.

Inflation and the policy backdrop

The Australian Bureau of Statistics reported on 26 August that consumer prices rose 3.5 per cent in the 12 months to July 2026, with trimmed mean inflation at 3.6 per cent. The August figures are due on 30 September.

The debate is over the mix of fiscal and monetary policy: the Treasurer says tax cuts ease cost-of-living pressure. Whether they add to Demand while the RBA raises rates is not settled by the data available so far.

What to watch

The immediate markers are the RBA decision and its accompanying statement, the August monthly CPI on 30 September, and the next official budget update. Receipts driven by super and Investment income can prove less predictable than wage-based taxes, which matters for how durable the improvement in the budget position turns out to be. This article is general information and not advice.

RBA Raises the Cash Rate

The RBA raised the cash rate target from 4.35% to 4.60% on 29 September 2026. The decision keeps Monetary Policy and inflation conditions relevant to the broader fiscal debate around household relief and government revenue.