Superannuation tax changes – what does it mean?

You may have heard about the Federal Government’s revised plan to change the way large superannuation accounts are taxed. But what does it mean?

The original super tax proposal

The government originally proposed to increase the tax rate from 15% to 30% on earnings from superannuation balances above $3 million. According to the Australian Treasury, superannuation is designed to provide income in retirement that substitutes or supplements the Age Pension. The original proposal aimed to make the system more sustainable by ensuring greater contributions from those with large super balances.

However, feedback from industry and the public raised concerns about fairness and complexity, particularly the inclusion of unrealised gains (investment increases not yet realised by sale).

What’s changing?

The Treasury has since revised the plan and on 13 October 2025, announced that the updated policy will:

• Index the tax threshold up to $10 million in line with inflation, instead of keeping it fixed at $3 million.
• Remove the taxation of unrealised gains, so that only actual profits are taxed.
• Delay implementation until July 2026.
• Apply a 30% tax rate to balances between $3 million and $10 million, and add a new 40% tax rate on balances above $10 million.

Support for low-income earners

The Low Income Superannuation Tax Offset (LISTO) provides up to $500 annually to help low-income Australians grow their super by refunding the tax paid on their concessional (before-tax) contributions.

The current ATO’s guidance on this existing scheme applies to individuals earning up to $37,000 per year. The proposal will see the threshold rise to $45,000 from 1 July 2027, meaning the maximum LISTO benefit will increase from $500 to $810 annually.

This change will ensure low-income workers receive a fairer tax concession on their super contributions to align with the Government’s third round of tax cuts taking effect in 2027.

How it affects you

For most Australians, nothing will change. The average super balance is well below the $3 million threshold, meaning these changes apply only to those with superannuation balances of $3 million and above.

For low-income earners, the LISTO continues to provide valuable tax relief on super contributions — helping ensure the system remains equitable and encourages savings across all income levels.

Talk to a Super Specialist

You can speak with one of our Super Specialists. Many members tell us how valuable these conversations are in helping them feel confident and in control. It's complimentary, and they can answer your general questions about superannuation, investments, insurance or transition to retirement.

References

• Australian Treasury. (n.d.). Superannuation policy overview.
• Ministers Treasury portfolio

This information is general information only and does not take into account your objectives, financial situation or needs. Before acting on this information, or making an investment decision, consider whether it is appropriate to you and read our Product Disclosure Statements and Target Market Determinations. You should also consider obtaining financial, taxation and/or legal advice tailored to your personal circumstances before making a decision. Financial products are issued by NGS Super Pty Ltd ABN 46 003 491 487 and AFSL 233 154.