Federal Budget and Super: What’s changing and why super still remains one of Australia’s best investments

With every federal budget comes speculation about major superannuation changes. But this year, for most Australians, the overall message is surprisingly reassuring:

The core benefits of super remain firmly in place.

While there are some targeted changes affecting very high balances, the broader super system continues to offer some of the best long-term investment and tax advantages available in Australia.

The biggest change: higher tax on super balances above $3 million

The main proposed super reform is the new Division 296 tax.

From 1 July 2026, individuals with more than $3 million in super may pay additional tax on earnings linked to the portion above that threshold, with the first assessment occurring after 30 June 2027.

Importantly:

• This affects only a very small percentage of Australians
• Balances below $3 million are unaffected
• Existing super tax concessions largely remain intact

For the vast majority of workers and retirees, this change will have little or no direct impact.

Contribution caps are increasing

There is also a positive update for people actively building wealth through super.

From 1 July 2026, contribution caps are expected to increase:

• Concessional contribution cap: from $30,000 to $32,500
• Non-concessional contribution cap: from $120,000 to $130,000

This means Australians will be able to contribute more into the low-tax super environment each year.

For people using salary sacrifice or long-term contribution strategies, this creates additional opportunities to grow retirement savings tax-effectively.

Payday super is coming

Instead of employers paying super quarterly, super contributions will increasingly be paid at the same time as wages. Learn more about Payday Super.

Why does this matter?

Because getting money invested earlier can significantly improve long-term outcomes through compound growth. It should also reduce unpaid or delayed super contributions.

Budget changes to property investing may increase the relative appeal of super

One of the biggest changes in this year’s federal budget was the government’s announcement relating to negative gearing and capital gains tax rules for investment properties.

The proposed reforms include:

• Limiting negative gearing benefits to newly built properties from 1 July 2027
• Removing the ability for investors buying established properties after budget night to offset rental losses against salary and other income
• Replacing the current 50% capital gains tax discount with a new inflation-indexation model
• Grandfathering existing investment properties purchased before the changes take effect

While these measures are primarily aimed at housing affordability and increasing housing supply, they may also change how Australians think about long-term investing.

Importantly, super continues to offer:

• Concessionally taxed investment earnings
• Tax-effective retirement income streams
• Long-term compounding in a structured environment
• Diversified investment exposure beyond residential property

For many Australians, the budget may reinforce the value of building wealth across multiple asset classes rather than relying heavily on leveraged property alone.

Super is still extremely tax effective

For most Australians:

• Investment earnings in super are taxed at a maximum of 15%
• Retirement-phase pensions can still be tax free within current limits

Compared with personal tax rates that can exceed 45%, super continues to provide major tax advantages.

The Super Guarantee is now at 12%

Australia’s compulsory employer contribution rate has now reached 12%.

This is a major long-term positive because it means:

• More money is invested earlier
• Compound growth has longer to work
• Retirement balances grow more consistently over time

The real power of super: long-term compounding

The true strength of super has always been long-term investing.

When you combine:

• Regular contributions
• Lower tax rates
• Decades of compound growth
• Diversified investment exposure

the results can be incredibly powerful over time.

For many Australians, super is still the single most effective structure for building long-term wealth.

Most popular super strategies remain available

Importantly, many commonly used strategies are unchanged, including:

• Salary sacrifice
• Contributions

The overall architecture of Australia’s super system remains largely intact.

Talk to an NGS Super Specialist

If you would like to discuss if the budget impacts your super, a conversation with an NGS Super Specialist can help. It’s complimentary, at no extra cost.

Book a chat with an NGS Super Specialist.