With the 2025–26 financial year underway, Australians have a valuable opportunity to enhance their retirement savings by strategically utilising superannuation contribution caps. Recent updates to contribution limits and thresholds present avenues for tax-effective savings, but navigating these changes requires informed planning.
Understanding the 2025–26 Super Contribution Caps
For the financial year commencing 1 July 2025, the Australian Taxation Office (ATO) has set the following superannuation contribution caps:
- Concessional Contributions Cap: $30,000 per annum. This encompasses employer contributions (including the Superannuation Guarantee), salary sacrifice arrangements, and personal contributions claimed as tax
- Non-Concessional Contributions Cap: $120,000 per annum. These are after-tax contributions for which no tax deduction is claimed.
It’s crucial to note that exceeding these caps may result in additional tax liabilities.
Benefits of Maximising Your Super Contributions
- Tax Advantages: Both concessional and non-concessional contributions come with tax benefits.
- Concessional Contributions are taxed at a flat 15% rate; however, if your income is $250,000 or above, you will be taxed an additional 15%, which is often lower than your marginal tax rate.
- Non-Concessional Contributions don’t attract additional taxes if kept within limits and can help increase your super balance faster.
- Compound Growth: The earlier and the more you contribute to superannuation, the more time your funds have to grow through compounding returns. This is particularly beneficial for young professionals and families planning for long-term financial stability.
- Access to Retirement Income Streams: For retirees, maximising contributions within the caps can help establish higher tax-free balances, ensuring you have a steady income stream in retirement while minimising tax liabilities.
Strategies to Maximise Your Super Contributions
- Utilise the Carry-Forward Concessional Contributions: If your total super balance was below $500,000 on 30 June 2025, you may be eligible to carry forward unused portions of your concessional contributions cap from the previous five financial years. This means you could contribute more than the standard $30,000 cap in 2025–26, potentially up to $167,500, depending on your unused caps from prior years.
- Consider the Bring-Forward Rule for Non-Concessional Contributions: Individuals under 75 years of age can “bring forward” up to two additional years of non-concessional contributions, allowing a contribution of up to $360,000 in a single year, provided their total super balance is below $2 million as of 30 June 2025.
- Leverage Government Co-Contributions: If your income is below certain thresholds, you may be eligible for government co-contributions. For instance, if you earn less than $43,445 and make a personal after-tax contribution of $1,000, the government may contribute up to $500 to your super. Partial contributions are available for incomes up to $58,445.
- Make Spouse Contributions for Tax Offsets: Contributing to your spouse’s super can provide tax benefits. If your spouse earns less than $37,000, you may receive a tax offset of up to $540 when contributing $3,000 to their super.
Key Considerations for 2025–26
- Superannuation Guarantee Increase: From 1 July 2025, the Superannuation Guarantee rate increased to 12%. Ensure that your salary sacrifice arrangements account for this change to avoid exceeding the concessional contributions cap.
- Total Super Balance Thresholds: Be mindful of your total super balance, as it affects your eligibility to make non-concessional contributions and access certain contribution strategies. For example, individuals with a total super balance of $2 million or more as of 30 June 2025 are not eligible to make non-concessional contributions.
Next Steps for a Secure Financial Future
Maximising your super caps can be one of the most rewarding financial moves you make in the 2025 financial year. Start by reviewing your current super balance, determining unused contribution caps, and aligning your contribution strategy with your financial goals. Whether you consult with a financial adviser or use online tools offered by your super fund, staying proactive is key to unlocking your super’s full potential.
By planning carefully and acting within the limits, you’ll enhance your retirement savings and take full advantage of Australia’s tax-smart retirement system.
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