Changes to the superannuation tax breaks

Changes to the superannuation tax breaks
Changes to the superannuation tax breaks

The Albanese government announced from 1 July 2025 a 30% concessional tax rate will be applied to future earnings for superannuation balances above $3 million.

This change announced today means 99.5 per cent of Australians with superannuation accounts will continue to receive the same generous tax breaks, and the 0.5 per cent of people with balances above $3 million will receive less generous tax breaks.

Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent. This will continue for all superannuation accounts with balances below $3 million.

From 2025‑26, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.

This is expected to apply to around 80,000 people, and they will continue to benefit from more generous tax breaks on earnings from the $3 million below the threshold.

The changes does not impose a limit on the size of superannuation account balances in the accumulation phase. And it applies to future earnings – it is not retrospective.

These tax breaks are expected to generate revenue of about $2 billion in its first full year of revenue after the election.

According to the 2022‑23 Tax Expenditures and Insights Statement the revenue foregone from superannuation tax concessions amounts to about $50 billion a year. The cost of these concessions is projected to exceed the cost of the Age Pension by 2050.

While making the announcement Prime Minister Albanese said, “This reform will strengthen the system by making it more sustainable. The savings that are made from the reduction in these tax breaks will contribute $900 million to the bottom line over the forward estimates, and some $2 billion when it is operating on a full-year period. This is an important reform.”

March, 01, 2023