How much do superannuation tax concessions cost in Australia?

How Australia's reliance on compulsory private retirement saving shapes its overall tax mix is covered in the comparison of Australian and OECD tax levels.

Superannuation benefits paid from a taxed fund are generally tax free for people aged 60 and over. That treatment covers both income stream payments from a taxed source and the taxable component of lump sums paid from a taxed fund. For a person below preservation age, a maximum rate of 20 per cent applies to the taxable component of a lump sum². Investment earnings on assets that support a retirement-phase income stream are taxed at zero per cent in the fund.⁶ The amount that can be moved into these accounts is limited by the transfer balance cap, which limits transfers into tax-free retirement-phase accounts and has applied since 1 July 2017.

Treasury's tax expenditure benchmark treats superannuation benefits as generally tax free. Tax that is still collected on some withdrawals is therefore treated as a negative tax expenditure, meaning it increases revenue relative to the benchmark. Treasury estimated the tax on funded superannuation lump sums at negative $1,050 million for 2025–26, and the tax on funded superannuation income streams at negative $120 million².

From 1 July 2026, the Division 296 tax reduces the concessions available on large balances. It applies at 15 per cent to taxable superannuation earnings attributable to the portion of a person's total superannuation balance above the $3 million threshold. A further 10 per cent applies to earnings attributable to the portion of the balance above the $10 million threshold. For 2026–27, the tax applies where the total balance at the end of that income year exceeds $3 million. Both thresholds are indexed to the consumer price index, with the $3 million threshold increasing in $150,000 increments and the $10 million threshold in $500,000 increments⁸.

According to Treasury, the measure applies to realised earnings rather than unrealised gains. The effective tax rate on affected earnings is 30 per cent for the portion attributable to balances above $3 million and up to $10 million, and 40 per cent for the portion attributable to balances above $10 million².

The measure was announced in the 2025–26 Mid-Year Economic and Fiscal Outlook and is now law. The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 and the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026 both received royal assent on 13 March 2026⁹. The Imposition Act sets an additional rate of 15 per cent on taxable superannuation earnings and a further 10 per cent on the very large balance earnings component¹⁰. Division 296 tax is generally due 84 days after the notice of assessment⁸, and a person can elect to have the amount released from their super fund.

The benefits of both concessions were concentrated among people with higher taxable incomes. In 2022–23, people with above-median taxable income received 87 per cent of the contributions concession benefit, and the top taxable income decile alone received 32 per cent. For the earnings concessions, people with above-median income received 79 per cent of the benefit, and the top decile received 38 per cent². Treasury explains that people in higher income deciles tend to make larger contributions and hold larger superannuation balances. They also face higher marginal income tax rates, making the flat 15 per cent rate more concessional for them. About 13 million people were affected by the contributions concessions in 2022–23 and about 18 million by the earnings concessions.

At the bottom of the income distribution the benefit can be nil or negative, because a 15 per cent contributions rate can exceed the marginal income tax rate a low-income earner would otherwise pay. Treasury notes this effect may be offset by the low-income superannuation tax offset, which its analysis excludes because the offset is a direct government payment. The distribution also differs by gender and age. Men received 61 per cent of the contributions concession benefit in 2022–23, with an average benefit of $2,490 compared with $1,610 for women. Men also received 60 per cent of the earnings concession benefit, while people aged 60 or older received 51 per cent².

A tax expenditure estimate measures a difference against a benchmark, not an amount collected. Treasury's revenue forgone approach measures the difference in revenue between the existing tax treatment and a benchmark treatment, assuming taxpayer behaviour stays the same and the existing treatment is removed entirely. Treasury states that these figures are not estimates of the revenue impact if a concession were removed, because taxpayers would be expected to change their behaviour. A removed concession would often be replaced with an alternative policy that reduces the net impact². Treasury also advises care when adding separate tax expenditure estimates together, or comparing them with direct government spending.

Income tax paid by superannuation funds is a separate measure. On the ABS accrual measure, superannuation funds paid $26,052 million in income tax in 2024–25, which was 3.9 per cent of the Commonwealth's $675.2 billion of taxation revenue. The amount varied sharply between years, from $6.6 billion in 2019–20 to $26.6 billion in 2021–22, then $10.4 billion in 2022–23 and $12.7 billion in 2023–24¹¹. The data does not identify the cause of each swing. The collections figure and concession estimates are also measured on different bases. The concession estimate is a modelled gap against a benchmark, while the ABS figure records tax revenue in government finance statistics.

Total superannuation assets were $4,437.9 billion at March 2026, on APRA's quarterly statistics, an increase of 7.9 per cent on a year earlier.¹² Funds with more than six members received $226.1 billion of contributions and paid $143.5 billion of benefits over the year to March 2026.