Super Tax-Saving Strategies 2025–26: Caps, Catch-Up & Offset
Super Tax-Saving Strategy 2025–26: Caps, Carry-Forward, Spouse Offset & Division 296
Superannuation is the most powerful legal tax shelter in the Australian system. The gap between the flat 15% super rate and a marginal rate of up to 47% is where the saving lives. This guide sets out every cap for the 2025–26 return, the carry-forward and bring-forward catch-up rules, the spouse contribution offset, and the strategy stack that turns the rules into real tax saved.
2025–26 super at a glance
- Concessional (before-tax) cap: $30,000 — includes the 12% employer SG, salary sacrifice and personal deductible contributions.
- Non-concessional (after-tax) cap: $120,000 — up to $360,000 under the 3-year bring-forward.
- 5-year carry-forward lets you use unused concessional cap if your total super balance was under $500,000 at 30 June 2025 — up to ~$167,500 in one year.
- Spouse contribution offset: up to $540 where your spouse earns under $37,000.
- Division 293 adds 15% (total 30%) on concessional contributions once income + contributions exceed $250,000.
- Division 296 (the $3m tax) does not apply to this return — it starts 1 July 2026.
The super decision tree: match your goal to a lever
Start with what you're trying to do — each goal maps to a specific strategy covered below.
| Your goal | Strategy |
|---|---|
| Reduce tax this year | Concessional contribution (salary sacrifice or personal deductible) |
| Invest surplus after-tax money | Non-concessional contribution |
| Boost a low-earning spouse's super | Spouse contribution (+ up to $540 offset) |
| Buy your first home | First Home Super Saver Scheme |
| Move home-sale proceeds into super | Downsizer contribution |
| Use up unused cap from past years | Carry-forward concessional contributions |
Why super saves tax: the three-layer arbitrage
Super is taxed concessionally at every stage. Each layer is a gap between the super rate and your ordinary rate.
Going in
Concessional contributions are taxed at a flat 15% in the fund, instead of your marginal rate of up to 47%.
While invested
Fund earnings are taxed at a maximum of 15% in accumulation phase, and 0% once supporting a retirement income stream.
Coming out
Withdrawals are generally tax-free from age 60.
The trade-off is access: super is preserved until a condition of release (preservation age is 60 for anyone born after 1 July 1964). You're swapping liquidity for tax. ("Generally" tax-free from 60 because the untaxed element of a benefit — rare, mostly in some public-sector funds — can still be taxable after 60.)
How much tax does a super contribution actually save?
The saving on each $1,000 of concessional contribution is simply your marginal rate (including the 2% Medicare levy) minus the 15% fund tax:
| Your taxable income (2025–26) | Saving per $1,000 concessional contribution |
|---|---|
| $18,201 – $45,000 (18% rate) | ~$30 |
| $45,001 – $135,000 (32% rate) | ~$170 |
| $135,001 – $190,000 (39% rate) | ~$240 |
| $190,000+ (47% rate) | ~$320 |
| Over $250,000 (Division 293 — taxed at 30% in fund) | ~$170 |
Approximate, based on 2025–26 resident marginal rates plus 2% Medicare. Once Division 293 applies, the contribution is taxed at 30% in the fund rather than 15%, so the per-$1,000 saving drops back to about $170 — still a clear win over keeping the income at 47%.
The two contribution buckets and their 2025–26 caps
| Concessional (before-tax) | Non-concessional (after-tax) | |
|---|---|---|
| What counts | Employer SG (12%), salary sacrifice, personal deductible contributions | After-tax personal contributions, spouse contributions |
| Taxed in fund | 15% (30% if Division 293 applies) | Nil — already taxed |
| 2025–26 annual cap | $30,000 | $120,000 |
| Catch-up | 5-year carry-forward | 3-year bring-forward ($360,000) |
| From 1 July 2026 | rises to $32,500 | rises to $130,000 (bring-forward $390,000) |
Concessional cap + the 5-year carry-forward (catch-up)
The carry-forward is the highest-value lever for anyone with uneven income. If your total super balance was under $500,000 at 30 June 2025, you can add unused concessional cap from the previous five years on top of this year's $30,000.
The rules that trip people up:
- Unused amounts accrue from 2018–19 onwards; each year's unused cap expires after 5 years if not used.
- The under-$500k test is measured only at 30 June of the prior year — so someone over $500k one year can drop under it later and become eligible.
- A taxpayer who has never used the cap could have up to ~$167,500 of concessional room available in 2025–26.
The ~$167,500 is a theoretical maximum that assumes zero concessional contributions across the whole window. For use in 2025–26 the available years are the five prior years — 2020–21 to 2024–25 — whose caps were $25,000 + $27,500 + $27,500 + $27,500 + $30,000 = $137,500, plus the current $30,000. (The 2020–21 cap was $25,000, not $27,500, which is why the figure is $167,500 and not higher.) Note also the upper age limit: a member can only make these contributions if the fund receives them on or before the 28th day of the month after they turn 75.
Dani sells an investment property in 2025–26 with a $120,000 net capital gain, and has $90,000 of unused concessional cap (TSB under $500k). A $90,000 personal deductible contribution moves that slab from her ~47% marginal rate to 15% in the fund — a saving of roughly $28,800, in a single move. Aligning a large carry-forward contribution with a one-off income event is the best CGT-year tool there is.
Non-concessional cap + the 3-year bring-forward
The $120,000 annual cap can be compressed into one year (up to $360,000) if you're under 75 — but how much depends on your total super balance, measured against the general transfer balance cap of $2.0 million for 2025–26.
| Total super balance at 30 June 2025 | Bring-forward available 2025–26 |
|---|---|
| Under $1.76m | $360,000 (full 3 years) |
| $1.76m to under $1.88m | $240,000 (2 years) |
| $1.88m to under $2.0m | $120,000 (1 year, no bring-forward) |
| $2.0m or more | Nil |
Once you trigger the bring-forward you're locked into that year's rules. Triggering in 2025–26 caps you at $360,000 even though the cap rises to $390,000 on 1 July 2026 — if you can wait until July, you get the higher figure.
The overall caps: TSB, transfer balance, Division 293 and Division 296
These ceilings sit above the contribution caps.
Total Super Balance (TSB) and the transfer balance cap
TSB is the sum of all your super across every fund at 30 June. It gates the carry-forward ($500k), the bring-forward bands, and spouse-contribution eligibility. The general transfer balance cap is $2.0 million for 2025–26 — the lifetime limit on what you can move into the 0%-tax retirement phase (rising to $2.1m on 1 July 2026).
Division 293 — the high-earner surcharge
An additional 15% applies to concessional contributions once your income plus those contributions exceed $250,000, taking the total tax on them to 30%. Critically, 30% still beats 47% — Division 293 reduces the salary-sacrifice benefit but never removes it.
Can you reduce Division 293 tax?
Mostly, no — and you usually shouldn't try. The income test is deliberately broad and built to resist avoidance, and you only need to exceed $250,000 by $1 to be caught. The genuine levers are narrow, and the biggest "strategy" people reach for actually backfires.
Salary sacrifice lowers your taxable income but increases your concessional contributions by the same amount — and Division 293 adds those contributions back in, so the net effect on the test is zero. Worse, if your income alone is under $250,000, voluntary concessional contributions can be the very thing that pushes you over and triggers the tax.
What does legitimately work — mostly for people sitting near the threshold:
| Lever | How it works | Watch-out |
|---|---|---|
| Time lumpy / one-off income | Defer a bonus, ETP, back-pay or capital gain into a year you're under $250,000; spreading a capital gain across two financial years can keep you under in either. | The single most effective real lever — needs forward planning. Division 293 is assessed year by year, so a one-off spike is often a one-year hit. |
| Bring forward genuine deductions | Work-related purchases, donations and prepaid deductible expenses lower taxable income and can keep you under $250,000. | Only helps if it gets you under the line. Negative gearing doesn't work — net rental and investment losses are added back for Division 293. |
| Switch to non-concessional | After-tax contributions don't count toward Division 293 income and aren't subject to the surcharge. | You give up the upfront 15% concession, but still get 15% on earnings inside super. Best once the concessional cap is used, or if you're hovering near the threshold. |
| Reduce voluntary salary sacrifice | If you're just under on income, not topping up keeps you under. | Trade-off is less in super; only relevant right at the line. |
| Hold investment income elsewhere | Income-generating assets held in a lower-earning spouse's name, a family trust, an investment bond or a company reduce the income assessed to you personally. | This is financial / structuring advice, not tax-return advice — refer to a licensed adviser. |
Traps and nuances worth knowing:
- The tax applies to the lesser of your concessional contributions or the amount you're over $250,000 — so just tipping over only catches the excess slice; being well over catches the full contributions.
- Net rental/investment losses and reportable fringe benefits are added back, so negative gearing and salary packaging give no Division 293 relief.
- You can't dodge the 12% SG portion — it's compulsory and counts if you're over the threshold.
- An employer "top-up" to cover the bill is itself a concessional contribution that counts next year and can compound — a cash bonus is cleaner.
- Carry-forward contributions count toward the test, but the benefit usually still stacks up.
- Excess concessional contributions are excluded (already taxed at your marginal rate), and you can pay the bill from your fund via a release authority — cash-flow management, not a saving.
"Based on your situation, Division 293 generally can't be avoided if your income is genuinely over $250,000 — and contributing to super is usually still worthwhile even with it, because 30% beats 47%. Where we can help is timing: if a one-off bonus or capital gain is what's tipping you over, managing which financial year it lands in is the legitimate lever." The investment-structuring options are financial advice and belong with a licensed adviser.
Division 296 — the new $3m tax (not on this return)
The original $3m proposal (taxing unrealised gains, no indexation, a 1 July 2025 start) was scrapped. The rewritten law passed Parliament in March 2026. For the 2025–26 return you're preparing now, Division 296 does not apply — it is forward-planning only.
From 1 July 2026 (first assessed year 2026–27): an extra 15% applies to the proportion of total super balance above $3 million, and a further amount above $10 million — roughly a 30% nominal rate on earnings for the $3m–$10m band and 40% above $10m. It taxes realised earnings only (unrealised gains were dropped), and both thresholds are indexed. Because the $3m threshold is per person, not per couple, evening up spouse balances becomes more valuable.
Two reliefs worth knowing for higher balances:
- CGT discount still applies. Where an asset has been held more than 12 months, the standard one-third CGT discount applies to the gain before the Division 296 calculation — a meaningful saving for long-held assets.
- SMSF cost-base reset. SMSFs (not standard industry or retail funds) can make a once-only, irrevocable, all-assets election to reset the cost base of assets held at 30 June 2026 to market value for Division 296 purposes — effectively excluding pre-July-2026 gains. The election must be made by the due date for the 2026–27 return.
Who should actually care about Division 296?
| Total super balance | What to do |
|---|---|
| Under $2m | Ignore for now |
| $2m – $3m | Monitor — growth and indexation could bring you into range |
| Over $3m | Start planning (from 2026–27) |
| Over $10m | Major planning issue — the higher 40% band applies |
Spouse super contribution tax offset (Item T3)
A direct, dollar-for-dollar saving for the contributing partner — 18% of contributions up to a $3,000 ceiling, so a maximum offset of $540.
| Spouse's income* | Max rebatable contribution | Maximum offset |
|---|---|---|
| Up to $37,000 | $3,000 | $540 |
| $37,001 – $39,999 | $3,000 − (income − $37,000) | ceiling × 18% |
| $40,000 and over | Nil | Nil |
*Assessable income + reportable fringe benefits + reportable employer super contributions.
Offset = lesser of (contribution, ceiling) × 18%
You contribute $2,000 for a spouse earning $38,300. Ceiling = $3,000 − ($38,300 − $37,000) = $1,700. The offset is the lesser of $2,000 and $1,700, × 18% = $306.
How the offset slides off above $37,000
The full $540 is only available while your spouse earns $37,000 or less. From there, the $3,000 rebatable ceiling falls dollar-for-dollar and reaches nil at $40,000 — so the offset slides from $540 to $0 across a $3,000 band:
| Spouse's income | Rebatable ceiling | Max offset (contributing the ceiling) |
|---|---|---|
| $37,000 or under | $3,000 | $540 |
| $38,500 | $1,500 | $270 |
| $40,000 or over | Nil | $0 |
Conditions: both Australian residents, not permanently living apart; the spouse is under 75; the contribution isn't claimed as a deduction or used for the co-contribution; and the spouse's TSB is under the transfer balance cap ($2.0 million for 2025–26, up from $1.9 million in 2024–25) and within their NCC cap. This is separate from contribution splitting, where you split up to 85% of your own concessional contributions into your spouse's account to even up balances — that generates no offset but is a key cap-management tool.
4 tax breaks most Australians forget
| Lever | What it does (2025–26) |
|---|---|
| Government co-contribution | For lower earners, the government adds 50c per $1 of after-tax contribution, up to $500 (on a $1,000 contribution). Upper income cut-out $62,488. |
| LISTO | Refunds the 15% contributions tax (up to $500) for those earning ≤ $37,000, so super isn't taxed more than take-home pay. From 1 July 2027 (the 2027–28 year) this rises to $810 with the threshold lifted to $45,000 — but for the 2025–26 and 2026–27 returns the $500 / $37,000 figures still apply. |
| Downsizer contribution | From age 55, up to $300,000 each ($600,000 a couple) from selling a home owned 10+ years. Sits outside the contribution caps and the work test. |
| First Home Super Saver | First-home buyers salary-sacrifice into super and withdraw it (plus deemed earnings) for a deposit — getting the 15% rate on the way in. |
Which super strategy fits your situation?
A fast pointer to the highest-value lever for your circumstances — the detail follows below.
| Situation | Best lever |
|---|---|
| Salary under $37,000 | LISTO (automatic) — and a $1,000 after-tax contribution for the co-contribution |
| Salary $37,000 – $60,000 | Government co-contribution |
| Salary $60,000 – $250,000 | Concessional contributions (salary sacrifice / personal deductible) |
| Income over $250,000 | Concessional contributions + Division 293 planning |
| One-off CGT gain or income spike | Carry-forward concessional cap |
| Couple with uneven balances | Contribution splitting / spouse contribution |
| Near retirement, sold the home | Downsizer contribution |
The tax-saving strategy stack
How the levers combine — framed as mechanics, since how much to contribute and whether to use a particular structure is financial-advice territory.
- Salary sacrifice vs personal deductible — same destination. Both are concessional (15% in fund, pre-tax to you), so the tax outcome is identical. Salary sacrifice must be prospective and arranged with the employer; the personal route gives EOFY flexibility but needs a valid notice of intent, acknowledged before you lodge — miss it and the contribution becomes non-concessional.
- Stack carry-forward into spike years. Align a large deductible contribution with a one-off income event (capital gain, bonus, ETP, business sale) to shift that income from ~47% to 15%.
- Division 293 doesn't kill the strategy. 30% in super still beats 47% outside — a 17-point gap. Filling the cap stays worthwhile for high earners.
- Even up spouse balances. With both the $2m transfer balance cap and the future $3m Division 296 threshold applying per person, $2m/$2m beats $3m/$1m. Levers: contribution splitting, spouse contributions, recontribution.
- Mind the EOFY deadline. Contributions count when the fund receives them, not when you send them. Treat ~25 June as the practical cut-off so a contribution doesn't slip into the wrong year.
For clients with taxable income under about $45,000, the concessional benefit is small (their marginal-plus-Medicare rate is only ~18%, barely above the 15% fund rate), and the deduction can't push taxable income below nil. For them, a $1,000 after-tax contribution to capture the co-contribution is usually the better play.
Super for new migrants and temporary residents
The same caps and concessions apply once you're an Australian resident for tax purposes, but migrants have a few extra moving parts: choosing a fund on arrival, consolidating multiple employer accounts, and the fact that temporary residents can generally claim their super back when they leave permanently through a Departing Australia Superannuation Payment (DASP) — which is taxed at high rates, so the planning differs from a permanent resident's. Carry-forward and co-contribution eligibility also turn on residency and how long you've been contributing. For the full picture, see our dedicated guide on Australian superannuation for migrants and the companion tax residency guide.
Frequently asked questions
How much can I contribute to super in 2025–26?
The concessional (before-tax) cap is $30,000, which includes your employer's 12% super guarantee, salary sacrifice and any personal deductible contributions. The non-concessional (after-tax) cap is $120,000, or up to $360,000 over three years under the bring-forward rule if you're under 75 and eligible.
What is the carry-forward (catch-up) concessional contribution rule?
If your total super balance was under $500,000 at 30 June 2025, you can use unused concessional cap from the previous five financial years (from 2018–19 onwards) on top of the current $30,000 cap. Each year's unused amount expires after five years. Someone who has never used the cap could contribute up to around $167,500 in 2025–26.
Can I claim a tax deduction for personal super contributions?
Yes. Make a personal contribution to your fund, then lodge a valid "notice of intent to claim a deduction" and receive the fund's acknowledgement before you lodge your tax return. The contribution is then treated as concessional and taxed at 15% in the fund. Miss the notice and it stays non-concessional with no deduction.
What is the spouse super contribution tax offset worth?
Up to $540 — which is 18% of contributions up to a $3,000 ceiling. You get the full offset where your spouse's income is $37,000 or less; it phases out and reaches nil at $40,000. The contribution can't be claimed as a deduction or used for the government co-contribution.
Does the Division 296 $3 million super tax apply to my 2025–26 return?
No. Division 296 starts on 1 July 2026, with the first assessed year being 2026–27. It does not affect the 2025–26 return. When it begins, it adds 15% to earnings on the proportion of your total super balance above $3 million (and more above $10 million), applies to realised earnings only, and the thresholds are indexed.
Can you reduce or avoid Division 293 tax?
If your income genuinely exceeds $250,000, Division 293 generally can't be avoided — the income test is deliberately broad. The most common idea, salary sacrificing more, does not help: extra concessional contributions are added back into the test, and can even push you over the threshold. The genuine levers, mostly for people near $250,000, are timing one-off income (bonuses, capital gains, termination payments) into a lower-income year, bringing forward genuine deductions, and switching to non-concessional contributions. Even when it applies, contributing is usually still worthwhile because 30% beats the 47% top marginal rate.
How much tax do I save with a super contribution?
Each $1,000 of concessional contribution saves your marginal rate (including the 2% Medicare levy) minus the 15% fund tax. Roughly: $30 if you earn up to $45,000, $170 between $45,000 and $135,000, $240 between $135,000 and $190,000, and about $320 if you earn over $190,000. Above $250,000, Division 293 taxes the contribution at 30% in the fund, so the saving drops back to around $170 per $1,000 — still better than keeping the income at 47%.
Is salary sacrifice still worth it if I earn over $250,000?
Yes. Once income plus concessional contributions exceed $250,000, Division 293 adds an extra 15%, taking the tax on those contributions to 30%. That is still well below the top marginal rate of 47%, so salary sacrifice continues to save tax — just less than for a mid-bracket earner.
Related Eduyush guides
- Australian Tax Offsets 2025–26: LITO, SAPTO, MLS & More — where the spouse super offset sits among every individual tax offset.
- RFBA, RESC & Spouse Income Tests — how reportable super contributions feed the income tests that affect your offsets and surcharges.
- Capital Loss Set-Off Rules — pair with the carry-forward strategy to manage a CGT spike year.
- Lump Sums, ETPs & Super Streams — the tax treatment of money coming out of super and on termination.
- Australian Superannuation for Migrants — fund choice, DASP and the early tax advantages for new arrivals.
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