2025 Superannuation Tax Changes – What You Need to Know

The Federal Government has announced significant changes to its previously stalled superannuation tax increase plan. After extensive feedback and industry concerns, the revised proposal is designed to better target high-balance superannuation accounts and ensure fairness across the system.

What Has Changed?

• Two-Tier Tax Thresholds:
  From July 2026, superannuation earnings on balances above $3 million will be taxed at 30%, while a higher rate of 40% will now apply to balances above $10 million. Importantly, both thresholds will be indexed for inflation. That means the limits will rise over time, helping avoid “bracket creep” where more people would be caught out just because of inflation, not additional wealth.

• No Tax on Unrealised Gains:
  Unlike earlier proposals, the government has removed tax on unrealised capital gains from super accounts. This means investors won’t be taxed on increases in asset value unless those assets are actually sold.

• Support for Low-Income Earners:
  The superannuation tax offset for low-income earners will increase from $500 to $810 and the eligibility threshold rises from $37,000 to $45,000. This assistance for workers earning under $45,000 a year starts in July 2027.

• Delay to Implementation:
  The main changes are scheduled to commence in July 2026, providing time for consultation and planning. Only the low-income offset changes will start earlier.

• Judges’ Exemptions Extended:
  Current tax exemptions for federal and state judges are being continued as before.

Who Is Affected?

• The new tiered taxes are designed to impact Australians with very large superannuation balances – about 90,000 accounts for the $3 million threshold and around 8,000 for the $10 million threshold.

• For everyday Australians, particularly those on lower incomes, the changes enhance the benefits and offer extra support at tax time.

These changes, if legislated, provide greater certainty and fairness. By adjusting thresholds for inflation, the rules are less likely to catch regular savers, and the exclusion of unrealised gains means fairer tax outcomes for all.

If you think these new rules might affect your superannuation balance, now is a good time to review your retirement strategy and seek trusted professional advice to optimise your situation for the coming years.