What is concessional super contributions in Australia 2026?
Concessional super contributions are pre-tax payments made to your super fund, typically by your employer or via salary sacrifice. They are tax-deductible, taxed at a lower rate of 15% within the fund, and capped annually. The 2026 cap has not yet been announced.
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How it works in practice
What are Concessional Super Contributions?
Concessional super contributions are payments made into your superannuation fund before tax. These typically include employer contributions (like the Superannuation Guarantee), as well as any personal contributions you make that you claim as a tax deduction, and amounts you contribute via a salary sacrifice arrangement with your employer.
Tax Benefits
The primary benefit of concessional contributions is their favourable tax treatment. Instead of being taxed at your marginal income tax rate (which can be up to 45% plus levies), these contributions are generally taxed at a flat rate of 15% within your super fund. This lower tax rate helps your retirement savings grow more efficiently.
Annual Cap for 2026
There is an annual cap on how much you can contribute concessionally each financial year. For the 2023-24 and 2024-25 financial years, the concessional contributions cap is $27,500. While the exact cap for the 2025-26 financial year (referred to as 2026 in the question) has not yet been officially announced, it is subject to indexation and will be communicated by the Australian Taxation Office closer to that time. It's crucial to stay updated on these caps to avoid exceeding them, which can lead to additional tax.
Important exceptions
Exceeding the annual concessional contributions cap can lead to additional tax, as the excess amount is added to your assessable income and taxed at your marginal rate. However, you may be able to make 'catch-up' concessional contributions if you haven't used your full cap in previous years and your super balance is below $500,000. Individuals with higher incomes (above $250,000) are also subject to an additional 15% tax on some or all of their concessional contributions, known as Division 293 tax.
What you should do now
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Understand the current concessional contributions cap for the relevant financial year, as it can change annually.
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Check if you are eligible for catch-up contributions or if you might be subject to Division 293 tax based on your income.
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Discuss salary sacrifice options with your employer if you wish to boost your super beyond the Superannuation Guarantee.
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Keep accurate records of all concessional contributions made throughout the financial year to avoid exceeding the cap.
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Consider seeking professional financial advice to tailor a superannuation strategy that aligns with your retirement goals and tax situation.
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