ACT Treasurer Chris Steel announced all first home buyers would be exempt from paying stamp duty on property purchases from July 1 as he unveiled the budget for the territory, which hosts national capital Canberra, on Wednesday.
The move is a significant milestone in ACT Labor's 20-year journey to abolish the tax in its entirety and replace it with higher property rates.
Andrew Leigh, a federal assistant minister and a former economist, commended the territory for its nation-first reform.
In a paper that Dr Leigh co-write while working as an academic at the Australian National University, he showed that higher rates of stamp duty reduced mobility and discouraged people moving to homes that suited their needs.
"It's a reform that economists are enthusiastic about," he told the National Press Club in Canberra.
But he watered down the suggestion that the federal government could provide funding to encourage other states and territories to transition away from stamp duty.
"The ACT has done that off its own bat. It hasn't received Commonwealth funding in order to do it, which I think demonstrates to other jurisdictions that this is possible as well," Dr Leigh said.
Stamp duty on property transactions has long been regarded by economists as one of the most inefficient taxes that exist in Australia, but efforts to stamp it out outside of the ACT have proven less successful.
In NSW, the former Perrottet coalition state government attempted to begin a transition from stamp duty to land tax in 2022.
But the incipient attempt at reform was extinguished by Labor after it won the 2023 election.
Stamp duty is such a key source of revenue for state governments. Filling that hole during the transition tends to be the main challenge.
"I really believe that you're never going to see Australia-wide stamp duty reform unless you get the federal government involved," Domain chief economist Nicola Powell told AAP.
In a 2025 report, Dr Powell found stamp duty costs had grown between 2.7 and 3.4 times faster than incomes in the eastern states since 2000, raising the home ownership hurdle.
Property Council policy executive Matthew Kandelaars also backed stamp duty's abolition.
"Stamp duty acts like a handbrake on a more productive economy," he said.
"It makes it harder for people to move closer to jobs and opportunities, reduces workforce mobility and makes our cities less efficient."
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