Capital gains tax in Australia: how the 50% discount works in 2026–27

A common belief is that capital gains have their own tax rate. They don't. A net capital gain is added to your taxable income and taxed at your marginal rate. What changes the bill is the 50% CGT discount, which halves the gain that counts if you held the asset for at least 12 months. This guide shows what that is worth at different incomes in 2026–27.

Update, 28 October 2026. This guide covers sales in 2026–27, when the 50% discount applies. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, gains that accrue from 1 July 2027 move to cost base indexation and a 30% minimum tax rate, with the discount kept for gains up to that date and for some new residential property. Assets sold from 1 July 2027 fall under the new rules. See negative gearing explained for a summary.

How the discount works

An Australian resident individual who owned an asset for at least 12 months can reduce the capital gain by 50% before it is added to income. Losses are taken off first, then the discount applies to what is left. Complying super funds get a smaller discount of one third. Companies don't get one.

What it saves

The table shows the extra tax, including the Medicare levy, on a gain from selling shares, held for less than 12 months and for 12 months or more:

In the last row the full gain pushes $24,000 of income into the 37% bracket. With the discount only $20,000 is added, and less of it reaches the higher rate. That is why the discount saves more than half the tax in that case.

Counting the 12 months

• The day you buy and the day of the sale are both excluded from the count.
• For property and other assets sold under a contract, the CGT event happens on the contract date, not settlement. A contract signed a few days too early can lose the discount.
• For shares, the trade date counts, not the date the money arrives.

The catches

• Foreign and temporary residents. The full discount is not available for gains made after 8 May 2012 by foreign or temporary residents. A reduced discount may apply for periods of Australian residency.
• A big gain lifts the bracket. The whole gain lands in one year, so it can push income into a higher tax bracket, and over the Medicare levy surcharge threshold. See the Medicare levy surcharge.
• It counts for other tests. A capital gain is part of taxable income, so it can affect income-tested payments, study loan repayments and Division 293.
• Your home is usually exempt. A main residence is generally exempt from CGT, with exceptions if it was rented out or used to earn income.

Timing and super

Because the tax depends on income in the year of the sale, the same gain can cost more or less depending on the year it falls in. Some people with a large gain use carry-forward super contributions to claim a deduction in the same year, which is covered in carry-forward super contributions.

Assumptions behind the numbers

• Tax uses 2026–27 resident rates (15% from $18,201, 30% from $45,001, 37% from $135,001 and 45% from $190,001), the 2% Medicare levy and the low income tax offset.
• Each example is an Australian resident for the full year, with salary as the only other income and no capital losses. The $1,000 standard deduction for work-related expenses, which applies to employees from 2026–27, comes off salary. No other deductions or offsets are included. Each holds private hospital cover, so no Medicare levy surcharge applies. Without cover, a gain that lifts income over $105,000 also adds the surcharge.
• The tax shown is the extra tax caused by the gain. Amounts are rounded to the nearest dollar.
• The ATO or a registered tax agent can confirm how CGT applies to a particular sale.