Superannuation changes proposed for high balances and low-income earners
• Super, retirement, tax,
The government has introduced significant proposed changes to Australia’s superannuation system that could reshape retirement savings for millions of Australians.
On 11 February 2026, Treasurer Jim Chalmers introduced the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 in Parliament. This proposed legislation targets both ends of the income spectrum, applying higher tax for those with very large super balances while boosting support for low-income earners.
New tax on large super balances
The Bill proposes a tiered Division 296 tax system for superannuation earnings on balances exceeding $3 million, commencing 1 July 2026:
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the current 15% tax rate would remain for earnings on balances up to $3 million;
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earnings on the super portion between $3 million and $10 million would be taxed at an effective 30% rate; and
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earnings on amounts above $10 million would face a 40% effective tax rate.
These thresholds will be indexed to keep pace with inflation. The new tax would apply only to future realised earnings, not unrealised capital gains on unsold assets.
This change would affect fewer than 0.5% of current superannuation members – approximately 80,000 Australians with extremely large super balances. For the vast majority, superannuation tax arrangements would remain unchanged.
Enhanced support for low-income earners
The low income superannuation tax offset (LISTO) is proposed to receive a significant boost from 1 July 2027:
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the eligibility threshold would increase from $37,000 to $45,000;
- the maximum payment would rise from $500 to $810; and
- automatic indexation would tie future adjustments to tax thresholds and superannuation guarantee rates.
The government says these changes will benefit over 1.3 million Australians, with around 60% being women. Treasury estimates eligible workers could see an average retirement benefit equivalent to an extra $15,000.
What this means for you
If you have a large superannuation balance, the changes could significantly impact your retirement planning strategy. The proposed tax increases represent a substantial shift in how high-balance superannuation is treated.
For low-income earners, the enhanced LISTO could provide meaningful support. The higher threshold would mean more workers qualify for the offset, while the increased payment amount means better tax outcomes on superannuation contributions.
Important timing considerations
Remember, this is proposed legislation that must pass Parliament before becoming law. The Bill may be amended during the parliamentary process, and implementation details are still being finalised.
The high-balance tax changes are proposed to commence 1 July 2026, and the LISTO improvements to begin 1 July 2027. This timeline provides opportunity for planning and preparation.
Employer implications
While the changes would primarily affect individual superannuation members, employers should be aware their low-paid employees may receive increased government offsets, and high-paid employees with large balances will face additional tax obligations.
Separately, remember that from 1 July 2026, employers must pay superannuation contributions at the same time as wages under the payday super requirements.
Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026