Singapore Budget 2026: New Support to Ease Rising Cost of Living
Singaporeans, brace yourselves for a dynamic economic landscape as Prime Minister and Minister for Finance Lawrence Wong unveiled the Singapore Budget 2026. This year’s budget is a strategic blueprint designed to navigate global economic currents, providing crucial support to households grappling with the persistent cost of living pressures while simultaneously laying robust foundations for the nation’s long-term growth and competitiveness. The biggest immediate impact for many Singaporeans will be the continued, albeit recalibrated, assistance to cushion the effects of inflation.
The Monetary Authority of Singapore (MAS) has raised its inflation forecasts for 2026, projecting both MAS Core Inflation and CPI-All Items inflation to average between 1.0% and 2.0%. This is an increase from the 0.5% to 1.5% range previously forecast in October 2025. This uptick is primarily driven by rising services unit labour costs, domestic wage increases, and stronger domestic demand. While imported inflation, influenced by global oil and food commodity prices, is expected to remain contained, consumer expectations reflect these pressures, with a December 2025 survey indicating that 83.4% of Singaporeans anticipate a slight increase in inflation over the next year.
Despite these inflationary headwinds, Singapore’s economy demonstrated remarkable resilience in 2025, achieving a robust 5% growth. The Gross Domestic Product (GDP) growth for 2026 is projected to be between 2% and 4%, an upgrade from earlier forecasts. This positive outlook is largely attributed to strong electronics exports and a sustained global Artificial Intelligence (AI)-driven capital expenditure cycle.
Targeted Relief for Households Amidst Continued Inflationary Pressures
Recognising that many Singaporean households are still adjusting to higher price levels, Budget 2026 introduces a suite of targeted measures. While the overall quantum of household transfers sees a more measured approach compared to the substantial packages of 2025, the government remains committed to providing essential relief.
- CDC Vouchers: All Singaporean households will receive S$500 in Community Development Council (CDC) vouchers, which are slated for disbursement in January 2027. This follows the S$800 provided in Budget 2025, reflecting a recalibration of broad-based support.
- U-Save Rebates and Special Payments: The budget maintains allocations for U-Save rebates and other special payments ranging from S$200 to S$400 to help eligible households offset utility bills and other daily expenses. These are a continuation of schemes that have historically provided significant relief, with Budget 2025 providing additional U-Save rebates up to S$760 quarterly, covering up to six months of utilities for smaller HDB flats.
- Support for Families with Children: Families with young ones will benefit from S$500 in LifeSG credits for each Singaporean child aged 12 and below. This builds upon previous efforts, such as the S$10,000 Child Development Account First Step Grant for third and subsequent Singaporean children born from February 18, 2025.
- Seniors and Vulnerable Groups: Older Singaporeans will receive a CPF top-up of up to S$1,500, specifically targeted at those aged 50 and above whose CPF retirement savings fall below the Basic Retirement Sum. Additionally, ComLink+ families will see a new S$500 payout, alongside enhanced cash support in existing packages, ensuring that the most vulnerable segments of society receive focused assistance.
These measures underscore the government’s commitment to ensuring that Singaporeans have the necessary support to manage their daily expenditures, allowing them to better plan for their financial futures. For many, these direct transfers are crucial in managing immediate needs, creating a more stable environment to consider broader financial goals like retirement planning and wealth accumulation.
Strengthening Singapore’s Economic Foundations and Fostering Long-Term Investment
Beyond immediate cost-of-living relief, Budget 2026 is deeply focused on positioning Singapore for future economic growth and enhancing its attractiveness for investment in Singapore. This forward-looking strategy includes significant commitments to innovation, workforce development, and fostering a dynamic business environment.
A key focus is on building an AI-ready economy. The government has earmarked a substantial S$1 billion for investments in computing capabilities, talent development, and industry transformation through AI. National AI Missions will concentrate on critical sectors such as advanced manufacturing, finance, healthcare, and connectivity. To foster a skilled workforce, Singaporeans undertaking qualifying AI courses will gain six months of access to premium AI tools, encouraging hands-on learning and experimentation.
Businesses will also see targeted support to enhance competitiveness and manage operating costs:
- Corporate Income Tax (CIT) Rebate: Companies will receive a 40% CIT rebate for the Year of Assessment 2026, with a minimum benefit of S$1,500 and a maximum of S$30,000 for active companies that employed at least one local employee in 2025. This is a reduction from the 50% rebate offered in YA2025, signalling a pivot towards more targeted, rather than broad-based, tax relief.
- Progressive Wage Credit Scheme (PWCS): To help businesses absorb the increase in the Local Qualifying Salary (LQS) from S$1,600 to S$1,800 in 2026, the government will raise the co-funding support under the PWCS from 20% to 30%. This aims to support wage growth for lower-wage workers while moderating cost increases for employers.
- Enhanced Internationalisation Support: Small and Medium-sized Enterprises (SMEs) looking to expand their footprint globally will benefit from an increased support level under the Market Readiness Assistance (MRA) grant, rising from 50% to 70% of eligible costs. This enhanced support, capped at S$100,000 per company per new market, will be available from April 1, 2026, to March 31, 2029, encouraging local businesses to explore new overseas markets.
- Deepening Capital Markets: To further boost equity investment in Singapore, the budget includes a S$1 billion expansion of the Startup SG Equity scheme to support growth-stage companies. Furthermore, a S$1.5 billion top-up to the Equity Market Development Programme and a second S$1.5 billion tranche for the Anchor Fund underscore the government’s commitment to fostering a vibrant capital market, critical for long term investment opportunities.
Navigating the Future: Stability and Opportunity
Singapore’s fiscal position remains strong, with the government closing FY2025 with an impressive surplus of S$15.1 billion, or 1.9% of GDP. While a smaller surplus of S$8.5 billion (1% of GDP) is projected for FY2026, this prudent management allows the nation to maintain reserves for future uncertainties while investing strategically. This fiscal prudence, coupled with targeted support and proactive economic restructuring, aims to create an environment where Singaporeans can achieve sustained wealth accumulation and secure their financial futures.
The Budget 2026 demonstrates Singapore’s adaptive strategy in a complex global environment. By providing immediate relief where needed, while simultaneously investing heavily in future-proof industries like AI and strengthening its financial ecosystem, Singapore aims to ensure that its citizens are well-equipped to thrive. The emphasis on skills development, particularly in AI, and the continued support for businesses to innovate and internationalise, all contribute to a resilient economy that fosters opportunities for sustained growth and prudent retirement planning for all Singaporeans.
