The short answer: concessional super contributions are generally taxed at just 15% going into your fund, while the same dollars taken as salary can lose up to 47% including the Medicare levy. Earnings inside super are taxed at a maximum of 15% while you’re accumulating, and at 0% once you’re in retirement pension phase. For most people over 60, withdrawals are tax-free.
That gap between 15% and 47% is the whole reason super exists as a deal: the government taxes your retirement savings lightly in exchange for you locking them away until later in life. Scott and Phil went back to basics on this in a recent episode, because it struck a nerve. Most people know super is “tax effective” without ever seeing the actual numbers. Here they are, current for 2026-27.
The three points where super gets taxed
Super is taxed at three possible points: money going in, earnings along the way, and money coming out.
Going in, concessional (before-tax) contributions are taxed at 15% inside the fund. These include your employer’s Superannuation Guarantee contributions, now 12% of ordinary earnings, plus any salary sacrifice or personal contributions you claim a deduction for.
Along the way, investment earnings are taxed at up to 15% while your super is in accumulation phase, often less in practice thanks to franking credits and capital gains discounts inside the fund. Once you move into retirement pension phase, earnings on that money are taxed at 0%.
Coming out, withdrawals after 60 from a taxed fund are generally tax-free, whether taken as a lump sum or a pension. As Phil likes to say when the tax office takes its cut: anything else is a gift to the government.
Figures are current as at 1 July 2026 (ATO) and are typically indexed or reviewed each financial year.
The concessional cap: $32,500 for 2026-27
The 15% deal has a limit. The concessional contributions cap is $32,500 for 2026-27, and it covers everything before-tax: employer SG, salary sacrifice and personal deductible contributions combined, across all your funds.
Here’s the working most people never do. Someone earning $150,000 sits on a 37% marginal rate plus Medicare. Each salary-sacrificed dollar inside the cap is taxed at 15% instead of 39%, keeping roughly 24 cents more of every dollar working for retirement rather than going to tax. Whether that trade suits you depends on cash flow, debts and timeline, which is exactly the conversation to have with an adviser and your accountant.
Please note: All figures, projections and scenarios in this article are approximate and for illustrative purposes only. Individual outcomes will vary based on personal circumstances, income, investment returns, fees and current government policy. This is general information, not personal or tax advice.
Carry-forward: catching up on missed years
If you haven’t used your full concessional cap in past years, the carry-forward rule may let you catch up. Unused cap amounts from up to five previous financial years can be added to this year’s cap, provided your total super balance was under $500,000 at 30 June of the prior year. Unused amounts expire after five years, so the oldest year drops off annually.
This is one of the most underused levers we see, and it can do serious work around one-off events. Phil walked through a real case study in our episode on how the Age Pension really works: a couple selling an investment property faced a $98,000 CGT bill selling in their last working year. Delaying the sale to the first retirement year cut it to $73,000, and using catch-up concessional contributions on top brought it down to $11,000. Same property, same sale, $87,000 difference, all in the timing and the caps.
Non-concessional contributions and the bring-forward rule
After-tax money can also go into super. The non-concessional cap is $130,000 for 2026-27, and these contributions aren’t taxed going in because you’ve already paid tax on them. The attraction is what happens next: those dollars then compound in the low-tax super environment instead of a fully taxed one.
Eligible people under 75 can use the bring-forward rule to contribute up to three years of caps at once, up to $390,000 in a single year. The amount available shrinks as your total super balance approaches the $2.1 million transfer balance cap, and hits zero above it, so the eligibility maths matters before any large contribution. This is where downsizer proceeds, inheritances and investment sale proceeds often end up, and it’s squarely “check before you contribute” territory, because excess non-concessional contributions carry ugly tax outcomes.
High earners: Division 293 and Division 296
Two extra layers apply at the top end.
Division 293 adds another 15% tax on concessional contributions once your income plus those contributions exceeds $250,000. That threshold has been frozen since 2017 while the cap keeps indexing, so more people cross it every year. At the 2026-27 cap, the maximum Division 293 bill is $4,875. Even paying it, contributions are taxed at 30% against a 47% top marginal rate, so the deal usually still favours super. One quirk worth knowing: salary sacrificing doesn’t get you under the threshold, because the contributions themselves count toward the income test.
Division 296, which commenced this financial year, adds an extra 15% on the earnings attributable to total super balances above $3 million, first tested on balances at 30 June 2027. It affects a small minority of people, but if you’re near that territory, it changes the structure conversation and belongs in front of your adviser and accountant together.
The simple stuff, done right
We generally find the biggest tax wins in super come from unglamorous basics done consistently: knowing the caps, using carry-forward before amounts expire, timing big contributions and asset sales around retirement, and not leaving the decision to the last week of June. None of it requires predicting markets. It’s the simple stuff that, done right, keeps more of your money working for you.
Scott and Phil cover the full set in the episode on the super tax strategy most Australians underuse, and the updated rules in Superannuation Secrets No One Tells You (2026 Rules). To see what extra contributions could mean for your own balance, run the numbers through the free Wealthlab super calculator.
FAQ
How much tax do I pay on super contributions? Concessional (before-tax) contributions are taxed at 15% inside your fund, up to the $32,500 cap for 2026-27. High earners with income plus contributions over $250,000 pay an extra 15% under Division 293. Non-concessional (after-tax) contributions aren’t taxed going in, up to the $130,000 cap.
Is super tax-free after 60? Generally yes. Withdrawals from a taxed super fund after age 60, whether lump sums or pension payments, are tax-free for most people. Earnings inside a retirement phase pension are also taxed at 0%, compared with up to 15% in accumulation phase.
What is the carry-forward rule for super? If your total super balance was under $500,000 at 30 June of the previous financial year, you can use unused concessional cap amounts from up to five prior years on top of the current year’s cap. Unused amounts expire after five years on a rolling basis.
What is the bring-forward rule? Eligible people under 75 can bring forward up to three years of non-concessional caps into one year, allowing up to $390,000 in 2026-27. The available amount reduces as your total super balance approaches $2.1 million, and eligibility is measured at 30 June of the prior year.
What is Division 293 tax? An additional 15% tax on concessional contributions for people whose income plus concessional contributions exceeds $250,000. It lifts the effective contributions tax to 30%, which is still below the top marginal rate, and the maximum bill in 2026-27 is $4,875.
Why is super taxed at only 15%? It’s the trade at the heart of the system: concessional tax treatment in exchange for locking money away until preservation age. The lower rates on contributions and earnings are designed to make retirement saving meaningfully better than saving the same dollars outside super.
Want to know which levers apply to you?
The caps and rules are general. Which ones are worth pulling, in what order, depends on your income, balance and timeline, and the tax specifics belong with your accountant. If you’d like to talk through how contribution strategy fits your broader retirement plan, book a free chat with the Wealthlab team. Or take the free Wealthlab retirement quiz for a general snapshot first.
