'Sensible and fairer' super tax overhaul announced
The Albanese government has scrapped several key elements of its controversial super tax plan, in a move to provide more certainty for Aussie savers.
16 Oct 2025
The Albanese government has scrapped several key elements of its controversial super tax plan, in a move to provide more certainty for Aussie savers.
The federal government has overhauled its controversial superannuation tax scheme, nearly two years after it was first announced. The proposal suggests ditching the plan to tax prospective earnings on super balances, with tax on balances over $3 million to rise with inflation to narrow the pool of Australians impacted.
These changes were among several key concessions announced by Treasurer Jim Chalmers this week, including a boost for low income earners. Assuming the proposed changes make it through the Senate—which will require the support of either the Greens or the Coalition—most will kick off from July 2026.
Super overhaul at a glance: what’s changed?
1. Indexation of the $3 million tax threshold on super balances
From July 2026, the tax rate on superannuation earnings for balances over $3 million will double to 30%, and for balances over $10 million, the rate will increase to 40%. Crucially, these thresholds would be indexed to inflation, meaning they’d increase each year which should prevent more Australians being impacted as their balances grew over time.
2. Scrapping the tax on unrealised gains
The government originally proposed a tax on unrealised gains in super, but faced criticism (particularly from self-managed super fund operators) who warned that savers could be forced to sell assets just to pay the tax. An unrealised gain is when an asset increases its value ‘on paper’ before it’s sold; you might see this when an asset like a family farm or investment property increases in value, for example.
In response, the government has now scrapped the plan, meaning superannuation gains will no longer be taxed until they are realised (i.e., when the asset is sold).
3. Changes to the low-income super super tax offset
The government plans to expand the low-income super tax offset to more Australians. Right now, those who make super contributions while earning $37,000 and under are eligible for a boost of up to $500 per year, paid directly into their super. From July 2027, the income threshold will increase to $45,000 and savers will be eligible for up to $810 a year. According to Treasury estimates, this could help low income earners retire with an extra $15,000 in their super savings.
How will the proposed changes affect Aussie savers?
Canstar’s data insights director Sally Tindall said that the government is showing it had “listened to concerns from a range of cohorts, and made sensible changes [to] get the legislation across the line and make it fairer for those impacted.”
Tindall says that the most important aspect of the changes is the indexation rule around balances of over $3 million.
“$3 million might seem like a healthy super balance today, but in 20 to 30 years time, this might look a lot different proportionally,” she said.
“This means young Aussies won’t have to rely on future governments to change [the threshold] based on political will … it’s nice to not have this looming threat hanging over your head when striving for a healthy super balance.”
At the other end of the spectrum, Tindall said the increase to the low income-super tax offset will help boost the super balance of those who qualify.
“While this requires the person or their employer to be making super contributions already, this is a genuine measure that will help lift people’s super balances over time, and can be especially important for low-income earners,” she said.
“Call your accountant or financial advisor and try to understand what impact the changes might have on you if and when they do materialise. Understand the timeframe too – these changes are slated for July 2026, so there’s time to prepare.”
Critics label changes a “gift” to the rich
The government’s proposal has not been warmly received by everyone. Greens Senator Nick McKim welcomed the boost for low-income earners, but accused the government of “capitulating” to the nation’s wealthiest people by making other key changes.
“Labor has stripped out the tax on unrealised gains and indexed the $3m threshold, a gift to the super-rich that will cost the budget billions,” he said.
The increased super tax had been one of Labor’s main revenue-raising policies at the 2023 federal election, and it is now unclear how the budgetary hole will be filled.
With support unlikely from the Greens, this means the Coalition will need to support the revamped plan for these changes to make it through the Senate.
This article was reviewed by our Finance Editor Jessica Pridmore and Deputy Finance Editor Alasdair Duncan before it was updated, as part of our fact-checking process.
