Your Super Caps Just Went Up: The Before-Tax Limit Is Now $32,500
On 1 July 2026 the concessional super cap rose to $32,500 and the after-tax cap to $130,000. Here's what that means and how salary sacrifice cuts your tax.
Every so often a change lands that helps ordinary earners without any of the fine print — and this is one of them. On 1 July 2026, the yearly limits on how much you can put into super went up.
It sounds like something only wealthy people worry about. It isn't. If you get paid a wage, you're already using this limit every payday — and understanding the new headroom is one of the simplest ways to pay less tax on money you were saving anyway. Here's the plain-English version.
What actually changed on 1 July 2026
There are two yearly caps on super contributions, and both were nudged up by indexation (the automatic increase that keeps limits in step with wage growth). From 1 July 2026:
- The concessional (before-tax) cap rose from $30,000 to $32,500 a year
- The non-concessional (after-tax) cap rose from $120,000 to $130,000 a year
Before-tax vs after-tax — what's the difference?
The two caps cover two different types of money, and mixing them up is where people go wrong.
Concessional (before-tax) contributions are dollars that haven't been taxed at your normal rate yet. That's your employer's compulsory super (the 12% Super Guarantee), anything you salary sacrifice, and personal contributions you claim as a tax deduction. These are taxed just 15% on the way into your fund.
Non-concessional (after-tax) contributions are money you've already paid tax on — savings from your bank account, say — that you tip into super to boost your balance. No tax goes in on these, because you already paid it.
For most PAYG (pay-as-you-go) wage earners, the before-tax cap is the one that matters day to day, because that 15% rate is the whole trick.
Why the 15% rate is worth real money
Salary sacrificing means telling your employer to divert part of your pay straight into super before it hits your bank account. That money is taxed at 15% inside the fund instead of your marginal rate — the rate on your top slice of income, which for a middle earner is 30% plus the 2% Medicare levy.
The gap between those two rates is your saving. On the 2026-27 tax rates, someone earning $100,000 sits on a 30% marginal rate, so every dollar they salary sacrifice is taxed at 15% instead of 32% (including Medicare). That's a 17c saving on every dollar redirected.
🧮Worked example
Priya earns $100,000 in 2026-27. Her employer's 12% super is $12,000, which already uses part of her $32,500 cap — leaving about $20,500 of room. She salary sacrifices $10,000 of it. Inside super that $10,000 is taxed at 15% ($1,500), so $8,500 lands in her balance. Taken as cash it would have been taxed at 32% ($3,200), leaving just $6,800. Same $10,000, but she's $1,700 better off for the year — and it's all still her money, working for retirement.
The trap: your employer already uses part of the cap
The most common mistake is treating the $32,500 as extra room on top of your normal super. It isn't. Your employer's compulsory contributions count toward the same cap — so the space left for salary sacrifice is $32,500 minus whatever your employer already puts in.
This matters because going over the cap costs you the benefit. The excess gets added back to your taxable income and taxed at your normal marginal rate, wiping out the 15% advantage (you can then elect to pull most of it back out). So before you set a salary-sacrifice amount, do the subtraction: cap, minus employer super, equals your real headroom.
🚨Do the subtraction first
On a $90,000 salary, employer super at 12% is about $10,800. That leaves roughly $21,700 of the $32,500 cap for salary sacrifice — not the full $32,500. Overshoot and the excess is taxed at your marginal rate, not 15%.
Been out of the workforce? You may have extra room
If your total super balance was under $500,000 on 30 June, there's a lesser-known rule that can help. It's called carry-forward: you can scoop up any unused before-tax cap from the previous five years and use it now, on top of this year's $32,500.
That's genuinely useful for anyone who's had a lean stretch — parental leave, part-time years, a career break — and didn't get near the cap. If you come into a bonus or an inheritance and want to soak up some tax, those stacked-up unused amounts can let you contribute far more than $32,500 in a single year and still get the 15% rate.
On the after-tax side there's a matching rule called bring-forward, which lets under-75s with a modest balance put in up to three years' worth at once — up to $390,000 (3 x $130,000) — handy if you've sold an asset and want it sheltered in super.
Which year does this apply to?
Timing trips people up every July. It's now tax season, you're lodging a return — so the new $32,500 cap applies to it, right? Not quite.
The return you lodge from July 2026 is your 2025-26 return, and for that year the before-tax cap was still $30,000. The new $32,500 cap applies to contributions you make from 1 July 2026 onwards — the 2026-27 year, which you won't lodge until July 2027. So the higher cap governs what you do with your pay right now, not the paperwork you're filing today.
What to actually do
You don't have to do anything — your super keeps flowing at 12% whether you act or not. But if you've got a bit of spare cash flow, the higher cap is a quiet opportunity worth a few minutes:
- Check a recent payslip for your employer's super, then subtract it from $32,500 to see your salary-sacrifice room
- Run the numbers through a calculator before you commit — you want the tax saving without denting your take-home pay more than you can afford
- If your income plus before-tax contributions tops $250,000, know that an extra 15% tax (called Division 293) applies to those contributions — still a good deal, just a smaller gap
- Set up salary sacrifice through your payroll, or make a personal contribution and claim the deduction at tax time — same cap, same 15% rate
FAQ
What is the before-tax super cap for 2026-27?
$32,500 a year, up from $30,000 in 2025-26. This concessional cap covers your employer's compulsory 12% super, anything you salary sacrifice, and personal contributions you claim as a tax deduction — all taxed at just 15% inside the fund.
Does my employer's super count toward the cap?
Yes. Employer contributions use up the same $32,500 cap, so your salary-sacrifice room is $32,500 minus whatever your employer already pays. On a $100,000 salary, employer super at 12% is $12,000, leaving about $20,500 of room.
What happens if I go over the cap?
The excess is added back to your taxable income and taxed at your marginal rate, cancelling the 15% benefit — and you can elect to withdraw up to 85% of it from your fund. If your income plus before-tax contributions exceeds $250,000, an extra 15% Division 293 tax also applies to those contributions.
Can I catch up if I contributed less in earlier years?
Often, yes. If your total super balance was under $500,000 on 30 June, the carry-forward rule lets you use unused before-tax cap from the previous five years on top of this year's $32,500 — useful after time out of the workforce or a low-income stretch.
Run your own numbers