Super is one of the most tax-advantaged structures in Australia — but only if you understand how the tax applies at each stage. Super is taxed at three points: when money goes in (contributions), while it's inside the fund (investment earnings), and when it comes out (withdrawals). The rates at each stage are generally much lower than personal income tax.
Tax on contributions
Concessional contributions (before-tax)
Employer SG, salary sacrifice, and personal deductible contributions are all taxed at 15% inside the fund. For most working Australians, this is significantly less than their marginal tax rate:
| Taxable income | Marginal rate (inc. Medicare) | Tax saving per $1,000 contributed |
|---|---|---|
| $18,201–$45,000 | 21% | $60 |
| $45,001–$135,000 | 32% | $170 |
| $135,001–$190,000 | 39% | $240 |
| $190,001+ | 47% | $320 |
Non-concessional contributions (after-tax)
These are made from money you've already paid income tax on, so they are not taxed again when they enter the fund. The cap is $120,000 per year (2025–26).
Low-income earners
If your adjusted taxable income is $37,000 or less, you may receive the Low Income Superannuation Tax Offset (LISTO) — a government contribution of up to $500 that effectively refunds the 15% contributions tax. See our guide for low-income earners.
Tax on investment earnings
Investment earnings inside super (interest, dividends, capital gains, rental income) are taxed at 15%. Capital gains on assets held for more than 12 months receive a one-third discount, making the effective rate 10%. Compare this to individual investors who pay their full marginal rate on investment income — the super tax advantage compounds dramatically over decades.
Tax on withdrawals
After age 60
All withdrawals from a taxed super fund after age 60 are completely tax-free — whether taken as a lump sum or income stream. This is the biggest single tax advantage of super.
Between preservation age and 60
The tax-free component of your super is always tax-free. The taxable component is taxed at your marginal rate, minus a 15% tax offset. The first $235,000 (2025–26, indexed) of taxable component from a lump sum is tax-free.
Before preservation age
You generally can't access your super before preservation age (60 for anyone born after 1 July 1964). If you access it under compassionate or hardship grounds, the taxable component is taxed at your marginal rate plus a 2% Medicare levy.
Tax on death benefits
Super death benefits paid to tax dependants (spouse, children under 18, financial dependants) are tax-free. Benefits paid to non-tax dependants (e.g. adult children) have the taxable component taxed at up to 17% (15% + 2% Medicare). See our death benefit tax guide.
Related guides
- Super contribution caps 2025–26
- Super for low-income earners
- Super death benefit tax
- Salary sacrifice into super