Superannuation remains the most tax-effective savings vehicle available to most Australians. But it comes with rules — caps on how much you can contribute, what type of contribution you can make, and under what circumstances you can access additional cap room.
Here are the rules that apply in 2025–26, and the strategies worth knowing.
Concessional contributions: $30,000 per year
Concessional contributions are pre-tax contributions: employer super guarantee (SG) payments, salary sacrifice amounts, and personal contributions you claim as a tax deduction.
The annual cap for 2025–26 is $30,000 per person. This cap includes your employer’s SG contributions. With the SG rate now at 12%, an employee earning $200,000 will have $24,000 of their cap used by employer contributions alone — leaving only $6,000 for personal salary sacrifice or deductible contributions before the cap is reached.
Concessional contributions are taxed at 15% inside super when they enter the fund (or 30% if your combined income exceeds $250,000 under Division 293 tax). For most Australians, this is significantly lower than their marginal tax rate.
Catch-up concessional contributions
If your total super balance was below $500,000 at 30 June of the prior year, you may be able to use unused concessional cap from the previous five years.
This is a powerful strategy for those who have had career breaks, self-employment periods with low super contributions, or have recently sold a business with a large capital gain to absorb. A person with $400,000 in super who has accumulated $60,000 of unused concessional cap over five years can potentially make a single $90,000 concessional contribution (current year cap plus catch-up) — generating a significant tax deduction and boosting their retirement savings in one transaction.
Non-concessional contributions: $120,000 per year
Non-concessional contributions are after-tax contributions — money you’ve already paid tax on. The annual cap is $120,000 per person in 2025–26.
Non-concessional contributions are not taxed when they enter the fund (you’ve already paid tax) and earnings inside super are taxed at 15% rather than your marginal rate. Once in pension phase, earnings become tax-free.
Eligibility to make non-concessional contributions depends on your total super balance at 30 June of the prior year:
- Below $1.68 million: up to $120,000 per year (or $360,000 under the bring-forward rule)
- $1.68m–$1.79m: bring-forward reduced
- $1.79m–$1.9m: bring-forward further reduced
- $1.9 million or above: no non-concessional contributions allowed
The bring-forward rule
Australians under age 75 who have a total super balance below the relevant threshold can bring forward up to three years of non-concessional contributions into a single year. This allows a contribution of up to $360,000 in one financial year.
The bring-forward is triggered automatically when you contribute more than $120,000 in a single year. Once triggered, you have a three-year window during which you cannot make further non-concessional contributions beyond what your initial three-year allowance permits.
This rule is particularly useful for:
- Receiving a large inheritance or windfall
- Selling an investment property or business and wanting to shelter proceeds in super
- Managing a spouse’s super balance to optimise the assets test for Age Pension purposes
Government co-contribution
If you earn below $43,445 (2025–26) and make a personal (non-concessional) contribution, the government will co-contribute up to $500 to your super. The co-contribution tapers to zero at $58,445.
This is one of the most straightforward, risk-free returns available — a 50% government return on contributions up to $1,000 for eligible earners. If you or your spouse earn in this range, it’s worth checking eligibility.
The work test for ages 67–74
Australians between 67 and 74 must meet the work test (at least 40 hours of gainful employment in a 30-consecutive-day period during the financial year) to make personal super contributions. There is a one-year exemption from the work test in the year after retiring — but only for those with a total super balance below $300,000.
This rule affects downsizer contribution strategy and the timing of non-concessional contributions for those approaching or recently in retirement.