Superannuation & Retirement Changes 2026–27
From 1 July 2026, a raft of changes to superannuation and retirement rules took effect. Some are the largest in a generation — a new tax on large balances, mandatory Payday Super, and higher contribution caps across the board. Here is everything you need to know.
Updated 1 July 2026 · General information only — not financial advice
At a glance — what changed on 1 July 2026
1. Contribution caps increase
The concessional (before-tax) contributions cap has risen to $32,500 per year, up from $30,000. This cap includes employer Superannuation Guarantee contributions, salary sacrifice, and personal deductible contributions. If you exceed the concessional cap, the excess is included in your assessable income and taxed at your marginal rate, with a 15% offset for contributions tax already paid inside super.
The non-concessional (after-tax) cap rises in step, from $120,000 to $130,000 per year. The three-year bring-forward cap increases to $390,000.
| Parameter | 2025–26 | 2026–27 | Notes |
|---|---|---|---|
| Concessional cap | $30,000/yr | $32,500/yr | Indexed to AWOTE in $2,500 increments |
| Non-concessional cap | $120,000/yr | $130,000/yr | = 4 × concessional cap by legislation |
| Bring-forward cap (3yr) | $360,000 | $390,000 | Requires total super balance (TSB) < $1.84M for full amount |
| Bring-forward cap (2yr) | $240,000 | $260,000 | TSB $1.84M–$1.97M (partial bring-forward) |
| NCC not permitted | total super balance (TSB) ≥ $2.0M | TSB ≥ $2.1M | Linked to Transfer Balance Cap |
| Carry-forward threshold | TSB < $500,000 | TSB < $500,000 | Unchanged |
| Max carry-forward pool | Up to $157,500 | Up to $175,000 | Sum of prior 5 unused years at new cap |
2. Transfer Balance Cap rises to $2.1 million
The general Transfer Balance Cap (TBC) increases from $2.0 million to $2.1 millionfrom 1 July 2026. This is the maximum amount of superannuation you can move into a retirement account (account-based pension), where investment earnings are completely tax-free.
If you have already commenced a pension, your personal TBC is set at the date you first moved money into retirement phase — it does not automatically rise to $2.1 million. Only people commencing a pension for the first time from 1 July 2026 benefit from the full $2.1 million cap. Check your personal TBC via myGov (ATO). If you have previously used some but not all of your personal cap, you may be entitled to a proportional increase — the ATO calculates this automatically based on your remaining cap space at the time of the general cap increase.
3. Payday Super — super must be paid within 7 days
One of the most significant structural changes in years: from 1 July 2026, funds must receive Superannuation Guarantee contributions within 7 business daysafter each payday — instead of the previous quarterly requirement. A 20-business-day exception applies for a new employee’s first contribution.
This matters for employees for two reasons. First, your super starts compounding sooner — earlier payment means more time in the fund earning returns. Second, unpaid contributions become far easier to detect, since any missed payment shows up within days rather than at the end of the quarter.
The SG rate itself is unchanged at 12%, having reached its legislated maximum on 1 July 2025.
4. Division 296 — new tax on large super balances
From 1 July 2026, a new tax applies to superannuation earnings on balances above $3 million. This is the most significant new super tax since the 2016 reforms and affects a small but growing number of Australians.
| Parameter | 2025–26 | 2026–27 | Notes |
|---|---|---|---|
| Large Super Balance Threshold (LSBT) | n/a | $3,000,000 | Indexed in $150k increments; $10M tier in $500k increments |
| Additional tax rate above LSBT | 0% | 15% | On earnings attributable to balance above $3M |
| Very Large Super Balance Threshold | n/a | $10,000,000 | Indexed in $500k increments |
| Additional tax rate above VLSBT | 0% | +25% (total 40%) | On earnings attributable to balance above $10M |
The tax applies to realised earnings — dividends, interest, rent, and capital gains on assets that have actually been sold. Unrealised gains on assets you still hold are not taxed (a significant change from earlier drafts of the legislation). However, unrealised gains do affect your total super balance, which determines whether the $3 million threshold is exceeded.
You can pay the Division 296 liability personally or elect to have it deducted from your super fund. The ATO will calculate the amount and issue an assessment after the end of the financial year.
5. Age Pension — thresholds updated, rates unchanged until September
The Age Pension is indexed twice a year (March and September) for payment rates and part-pension cutoffs, and once a year (July) for the full-pension lower thresholds and income free area. From 1 July 2026:
| Parameter | 2025–26 | 2026–27 | Notes |
|---|---|---|---|
| Single homeowner full pension threshold | $321,500 | $333,000 | Asset test lower limit (July update) |
| Couple homeowner full pension threshold | $481,500 | $499,000 | Asset test lower limit (July update) |
| Single non-homeowner threshold | $579,500 | $600,000 | Asset test lower limit |
| Couple non-homeowner threshold | $739,500 | $766,000 | Asset test lower limit |
| Income free area — single | $5,668/yr | $5,876/yr ($226/fn) | July update |
| Income free area — couple | $9,880/yr | $10,296/yr ($396/fn) | July update |
| Deeming threshold — single | $64,200 | $66,800 | CPI-indexed July |
| Deeming threshold — couple | $106,200 | $110,600 | CPI-indexed July |
| Deeming rates | 1.25% / 3.25% | 1.25% / 3.25% | Unchanged from March 2026 |
| Single max pension | $31,223/yr | $31,223/yr | Unchanged until 20 Sep 2026 |
| Couple max pension (combined) | $47,070/yr | $47,070/yr | Unchanged until 20 Sep 2026 |
Payment rates (the fortnightly amounts) and part-pension cutoffs are not changing on 1 July — they remain at March 2026 levels. The next full indexation is 20 September 2026.
6. Government co-contribution and LISTO thresholds updated
| Parameter | 2025–26 | 2026–27 | Notes |
|---|---|---|---|
| Co-contribution lower income threshold | $45,400 | $49,293 | Max $500 co-contribution applies below here |
| Co-contribution upper income threshold | $60,400 | $64,293 | Co-contribution phases out to zero here |
| LISTO maximum payment | $500 | $810 | Legislated increase — now linked to income tax thresholds |
| LISTO income threshold | $37,000 | $45,000 | Expanded — permanently linked to tax thresholds |
The Low Income Superannuation Tax Offset (LISTO) sees the most significant change — the maximum payment rises from $500 to $810 and the income threshold expands to $45,000, permanently linked to the income tax free threshold structure. This means more low-income earners effectively pay no tax on their super contributions.
7. Super on Paid Parental Leave — first payments arrive
The government legislated in September 2024 that a 12% superannuation contribution would be paid on top of government-funded Paid Parental Leave for eligible parents whose babies were born or adopted from 1 July 2025. Those contributions are now flowing — the ATO will pay the super as a lump sum directly to individuals' funds from July 2026.
This affects approximately 180,000 families per year and is particularly significant for women, who historically accumulate less super due to career breaks for caring responsibilities.
8. CGT discount changes — now law, effective 1 July 2027
From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships is replaced with cost base indexation (so only real, inflation-adjusted gains are taxed) and a minimum 30% tax rate on net capital gains. The changes apply to gains accruing on and after 1 July 2027 — gains that accrued before that date retain the existing 50% discount treatment under transition rules.
Key points for retirement planners:
- Super is exempt — superannuation funds retain the existing one-third CGT discount in accumulation phase. No change to how super earnings are taxed.
- Age Pension recipients exempt from minimum tax— income support recipients are excluded from the 30% minimum tax floor.
- New residential dwellings — investors can choose between the 50% discount or the new indexation regime for new builds.
- Small business concessions retained — the 50% active asset CGT reduction threshold rises from $2M to $10M turnover. Other small business concessions are preserved.
- Negative gearing — also now law from 1 July 2027: deductions for net rental losses on established residential properties acquired after 12 May 2026 are limited to rental income only. Grandfathering applies to properties acquired before 7:30pm AEST 12 May 2026.
- SMSF borrowing — as part of the Senate deal, SMSFs will be prohibited from borrowing to fund property investments going forward.
9. Defined benefit pension indexation (PSS, CSS, MSBS)
CSS, PSS and MSBS indexed pensions increased by 2.0% from the first pension payday in July 2026, processed by CSC on 12–13 June 2026. The rate is calculated from the CPI movement between the September 2025 and March 2026 quarters.
DFRDB and DFRB pensioners aged 55 and over receive a higher rate of 2.7%, based on the LCI (Pensioner and Beneficiary Living Cost Index) exceeding both the CPI and the MTAWE benchmark for this adjustment period.
For a detailed breakdown of the calculation and historical rates, see our PSS and CSS pension indexation 2026 article.
10. What didn't change
Several commonly asked-about parameters are unchanged from 2025–26:
- SG rate — remains at 12% (reached its legislated maximum on 1 July 2025)
- Division 293 income threshold — remains at $250,000 (unchanged since 1 July 2017). Additional 15% tax on concessional contributions still applies above this threshold
- Deeming rates — 1.25% (below threshold) and 3.25% (above) — last changed March 2026
- Age Pension payment rates — unchanged until 20 September 2026 indexation
- Minimum pension drawdown rates — back to pre-COVID normal rates since 2023–24, no change
- Downsizer contribution age — remains 55+, cap remains $300,000 per person
- Work Bonus — $300/fn exemption, $11,800 bank cap — next review September 2026
- CSHC thresholds — $101,105 (single) / $161,768 (couple) — next update September 2026
- Preservation age — unchanged. It is 60 for anyone born after 30 June 1964
Model these changes in RetireConfident
The RetireConfident calculators are updated for all 2026–27 parameters — new contribution caps, the $2.1M Transfer Balance Cap, July 2026 Age Pension thresholds, and current deeming rates.