The $3 Million Super Tax Is Now Law: Does It Actually Affect You?

You've probably seen the headlines: a new tax on superannuation over $3 million, sometimes called the "$3 million super tax" and officially known as Division 296. It passed Parliament in March 2026 and it starts on 1 July 2026.

If your super is nowhere near $3 million — and for the overwhelming majority of Australians it isn't — the short version is simple: nothing changes for you. But it's still worth understanding, because the version that made all the frightening headlines is not the version that became law.

Division 296 is an extra layer of tax on the earnings of very large super balances. It sits on top of the normal 15% tax your super fund already pays on its earnings each year.

The key point people miss: it only touches the slice of your total super balance above $3 million. Everything up to $3 million is taxed exactly as it always has been. So the first $3 million in anyone's super is left completely alone.

Here's how the layers stack up on your super's earnings from 1 July 2026:

Treasury estimates about 0.5% of people with super — roughly 80,000 Australians — will pay anything at all in the first year. The other 99.5% of us are entirely unaffected.

Put that in perspective: $3 million is an enormous super balance. The typical balance at retirement is a small fraction of that number. If you're a regular PAYG (pay-as-you-go) earner having the standard 12% employer contributions paid into your fund, you are almost certainly nowhere near the line — and this tax simply doesn't touch you.

The proposal that generated most of the outrage would have taxed "unrealised gains" — increases in the value of assets you still own, even if you hadn't sold anything. Under that draft, a farm or a commercial property held inside a self-managed super fund could have triggered a tax bill in a year you received no actual cash. That was the genuinely alarming bit, and it's the bit that got dropped.

The law that passed taxes actual, realised earnings only — the interest, dividends, rent and realised capital gains (profits on things your fund has actually sold) that the fund genuinely receives. If an asset simply rises in value on paper and you keep holding it, that rise is not taxed under Division 296.

Say your total super balance is $4 million, and over the year your fund earns $200,000 in realised income — interest, dividends, rent and gains you actually crystallised.

Only the slice above $3 million counts. Here, $1 million of your $4 million sits above the line — that's 25% of your balance. So 25% of your $200,000 earnings, or $50,000, is treated as "over-threshold" earnings.

Division 296 adds 15% on that $50,000 — an extra $7,500 for the year. That's on top of the up-to-15% your fund already pays on its earnings, and your first $3 million keeps being taxed exactly as before.

One of the fairer changes in the final law: both thresholds are indexed to inflation (measured by the Consumer Price Index, or CPI). They rise over time instead of quietly dragging more people in as balances grow — a problem known as "bracket creep."

The $3 million threshold lifts in $150,000 steps, and the $10 million threshold in $500,000 steps. So the first time inflation is high enough to trigger it, $3 million becomes $3.15 million and $10 million becomes $10.5 million.

For almost everyone, the honest answer is: nothing. Keep contributing to super the normal way — it's still one of the most tax-effective places to build wealth in Australia, and the first $3 million is untouched.

If you're one of the few with a balance near or above $3 million, the main thing is not to panic. The final rules are milder than the draft, they're indexed, and the first assessment doesn't land until after 30 June 2027. That makes it a considered conversation with a licensed adviser or your accountant — not a rushed decision driven by last year's headlines.