Tax Planning

Navigating the Superannuation Tax Hike for High Balances: What You Need to Know

Australia’s ‘Better Targeted Superannuation Concessions’ will cut tax concessions on earnings above $3 million from 1 July 2025—this article breaks down how it works, who’ll be affected, and smart strategies to prepare.

By NomadicTax Research Team • 5-8 min read • November 21, 2025

## Understanding the New Superannuation Concession Changes From **1 July 2025**, the Australian Government will reduce the tax concessions applied to certain earnings in superannuation balances that exceed **$3 million**. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai)) Under this measure—known as the *Better Targeted Superannuation Concessions*—earnings attributable to amounts over $3 million will be taxed at **30%**, replacing more favorable concession rates for those earnings. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai)) ### Who is Affected? - Individuals with total super balances exceeding **$3 million** as of the end of the 2025-26 financial year. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-30-october-2023?utm_source=openai)) - The roughly **0.5%** of superannuants in this bracket, estimated around **80,000** people. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-30-october-2023?utm_source=openai)) - All types of super funds—SMSFs, large APRA funds, and those with defined benefit elements—are under scope. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-30-october-2023?utm_source=openai)) ### Key Details and Implications - The tax change is a reduction in concessional rates, not removal of contributions rights. Contributors over $3 million will still make standard contributions, just that **future earnings** above that threshold will be taxed at the higher rate. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai)) - The existing contribution caps, preservation rules, and access to super remains intact. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-30-october-2023?utm_source=openai)) ### Practical Planning Tips 1. **Forecast your super balance** before 30 June 2026. If you're likely to cross the $3 million threshold, consider how much growth your portfolio has and whether earlier withdrawals or restructuring might help. 2. **Assess asset mix**: Super funds with high-growth assets make it easier to cross the threshold. A shift to more income-producing or lower growth holdings could slow balance growth. 3. **Engage your fund** to ensure precision in reporting earnings attributable to amounts over $3 million—that calculation determines the tax liability. 4. **Consider timing** of transitions: If you're near the threshold, delaying or bringing forward certain contributions or rollovers could have tax impacts. ### Example Scenario > Sarah has a superannuation balance of **AUD 2.8 million** as of 30 June 2025. Over the next year, her investment returns are projected to add **$500,000**, which would push her over the threshold and expose **$300,000 of earnings** above $3 million to **30% tax**, instead of the standard 15% or more favorable rate. She could reallocate growth assets or limit contributions to lessen exposure, or accept the tax and plan on earnings based on revised thresholds. ### Bottom Line If your super balance is sizeable and growing, this concession change is likely to affect you. Understanding the threshold, tracking earnings, and making strategic adjustments now can help you manage tax outcomes. Always consult with a financial adviser or tax professional to map your super strategy in light of these reforms.