Concessional Super Contributions Explained (2025–26)

Concessional super contributions are contributions made to your super fund from pre-tax money — and they are one of the most effective tax strategies available to working Australians. For FY2025–26, the annual concessional cap is $30,000. Every dollar you contribute concessionally is taxed at just 15% inside your super fund, rather than at your marginal income tax rate.

This guide explains what concessional contributions are, what counts toward the cap, how the tax saving works, and the rules around catch-up contributions and claiming a deduction.

What Are Concessional Contributions?

A concessional contribution is any contribution to super that has not already been taxed at your marginal income tax rate. The word “concessional” refers to the concessional (reduced) 15% tax rate that applies to these contributions inside the fund, rather than the rate you’d pay on equivalent income.

There are three types:

All three count toward the same annual concessional cap. Once inside the fund, all are taxed at the same 15% rate.

The Concessional Contributions Cap

The annual concessional contributions cap for FY2025–26 is $30,000.

This cap covers the total of all concessional contributions from all sources — your employer’s SG, any salary sacrifice, and any personal deductible contributions you make yourself. It is a combined cap, not separate limits per type.

Historical Concessional Caps

The cap is indexed to Average Weekly Ordinary Time Earnings (AWOTE) in $2,500 increments. It increased from $27,500 to $30,000 in FY2024–25 when the AWOTE threshold was met.

Why the Cap Matters

Exceeding the concessional cap has tax consequences. Excess concessional contributions are:

1. Included in your assessable income and taxed at your marginal tax rate
2. Subject to an excess concessional contributions charge (interest)
3. Eligible for a 15% tax offset (to account for the contributions tax already paid by the fund)

You can elect to withdraw up to 85% of the excess from your super fund to help pay the resulting tax bill. If you don’t withdraw, the excess remains in super but is counted toward your non-concessional cap.

The ATO will notify you if you exceed your cap after your fund reports contributions. You don’t need to proactively calculate this yourself, but it pays to track it during the year.

How the Tax Saving Works

The value of concessional contributions comes from the gap between your marginal tax rate and the 15% contributions tax.

Tax Saving by Income Bracket (FY2025–26)

For the highest earners, every $1,000 in concessional super contributions saves $320 in tax compared to receiving it as ordinary income.

Division 293 — High Earner Surcharge

If your income (plus concessional contributions) exceeds $250,000 in a financial year, you pay an additional 15% tax on concessional contributions — called Division 293 tax. This brings your effective contributions tax rate to 30%, which still compares favourably to the 47% marginal rate.

Division 293 is assessed by the ATO separately after you lodge your tax return. You can pay it from super or from personal savings.

What Each Type Looks Like in Practice

1. Employer SG Contributions

Your employer contributes 12% of your ordinary time earnings to your super fund each quarter (as of 1 July 2025). These count automatically toward your concessional cap — you don’t need to do anything.

For example, if your salary is $80,000:

• Annual SG = $80,000 × 12% = $9,600
• Remaining cap space = $30,000 − $9,600 = $20,400

You could use that remaining $20,400 through salary sacrifice or personal deductible contributions before hitting the cap. See our guide on super contribution rates for more on employer obligations.

2. Salary Sacrifice Contributions

Salary sacrifice is an arrangement where your employer pays a portion of your pre-tax wages directly into your super fund instead of to you. Because the money goes into super before it reaches you, it is taxed at 15% rather than your marginal rate.

To set up salary sacrifice, you need a written agreement with your employer before the income is earned — you cannot retrospectively salary sacrifice wages already paid. Contact your payroll or HR department to arrange this.

Example: If you earn $100,000 and salary sacrifice $10,000/year:

• You pay income tax on $90,000 instead of $100,000
• The $10,000 is taxed at 15% inside super
• Total additional super = $10,000 (on top of the SG your employer also pays)

Note: from 1 January 2020, salary sacrifice cannot reduce the base on which your employer calculates their SG obligation. Your employer still pays SG on your ordinary time earnings as if you hadn’t sacrificed.

3. Personal Deductible Contributions

If you are self-employed, or if your employer doesn’t offer salary sacrifice, you can make personal contributions from your bank account and then claim a tax deduction — effectively creating the same pre-tax benefit.

To claim the deduction, you must lodge a Notice of Intent to Claim a Deduction (ATO form NAT 71121) with your super fund. This notice must be lodged:

• Before you lodge your tax return for that year, and
• Before certain triggering events: rolling over the fund balance, withdrawing benefits, or the fund beginning to wind up

Once the fund acknowledges your notice, those contributions are reclassified as concessional and taxed at 15% inside the fund. You claim the deduction in your individual tax return.

Important: You cannot claim a deduction for contributions made under a salary sacrifice arrangement. That is handled by your employer. Personal deductible contributions are only for contributions you make directly from your own bank account.

Work Test Rules for Ages 67–74

From 1 July 2022, the work test for voluntary super contributions was abolished for people aged 67–74. This means you can now make voluntary concessional contributions (including salary sacrifice) without needing to meet any work test, right up to age 74.

However, there is an important exception: if you are aged 67–74 and you want to claim a tax deduction for personal contributions under Section 290-170 of the Income Tax Assessment Act 1997, you must still satisfy the work test — that is, you must have worked at least 40 hours in any 30-consecutive-day period in the financial year in which you made the contribution.

In summary:

*People aged 75 and over can still receive employer SG and make downsizer contributions — but not voluntary concessional contributions.

Carry-Forward (Catch-Up) Concessional Contributions

If you have not used your full concessional cap in previous years, you may be able to carry forward the unused amounts and contribute more than the annual cap in a later year. This is called the carry-forward rule (also sometimes called catch-up contributions).

Rules

• You can carry forward unused cap space from FY2018–19 onwards (the rule was introduced that year)
• You can access up to 5 years of accumulated unused space
• Your total super balance (TSB) must be below $500,000 at 30 June of the previous financial year

Example

Suppose your TSB at 30 June 2025 was $380,000, and you had $35,000 of unused cap from prior years:

• FY2025–26 cap = $30,000
• Carry-forward available = $35,000
• Total you could contribute concessionally = $65,000

You would need to check with the ATO (via myGov/ATO Online) to see exactly how much carry-forward is available to you. The ATO tracks this automatically.

Carry-forward is particularly useful for people returning to work after a career break, those with lumpy income (e.g. commission-based workers or small business owners), or anyone who wants to make a larger one-off top-up before retirement.

How to Check Your Available Cap Space

1. Log in to myGov and navigate to the ATO section
2. Go to Super → Information → Carry-forward concessional contributions
3. The ATO shows your available unused cap for each prior financial year from FY2018–19

Alternatively, your super fund’s annual statement shows total contributions received, which you can compare against the annual cap.

Frequently Asked Questions

Do employer SG contributions count toward my concessional cap? Yes. All employer contributions — including the standard 12% SG and any additional employer contributions — count toward your $30,000 concessional cap. If your employer also makes contributions above the SG, check whether you are approaching the cap before making further voluntary contributions.

Can I exceed the concessional cap deliberately and just pay the tax? You can, but it is rarely efficient. Excess concessional contributions are taxed at your marginal rate (less a 15% offset), with an additional interest charge. The only advantage is the money remains in the concessional tax environment inside super. In most cases, it makes more sense to use non-concessional contributions for amounts above the cap.

What happens to concessional contributions inside my fund? Once inside the fund, they form part of the “taxable component” of your super account. This matters when you eventually withdraw: if you withdraw before age 60, the taxable component may attract tax. After age 60, withdrawals are generally tax-free. Your fund tracks these components automatically.

Can I split concessional contributions with my spouse? Yes. Contribution splitting allows you to transfer up to 85% of your concessional contributions from the previous financial year into your spouse’s super account. This can help equalise balances between partners, which may be beneficial for estate planning or Age Pension purposes. The 85% figure accounts for the 15% contributions tax already paid by the fund.

Are salary sacrifice contributions concessional? Yes. Salary sacrifice contributions are made from pre-tax income and are taxed at 15% inside the fund — they are concessional by nature and count toward the annual cap.

For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.