By Colin Lewis, Head of Strategic Advice, Fitzpatricks Advice Partners
February 2025

From 1 July this year, you may be able to boost your superannuation savings and have more for retirement because the contribution caps are going up.

Wages data, released on 26 February 2026 was high enough for the concessional contributions cap to be indexed – as highly anticipated.

The Australian Taxation Office needs to formally confirm this increase.

Concessional contributions

On 1 July 2026, the concessional contributions cap will increase from $30,000 to $32,500.

Concessional contributions are pre-tax contributions that include employer compulsory award and Superannuation Guarantee contributions and additional voluntary contributions – including salary sacrifice – and personal contributions where a tax deduction is claimed.

So, if you make voluntary pre-tax contributions, the increased cap may mean a bigger deduction and tax saving.

Double contribution strategy

If you have a self-managed super fund (SMSF) and are able to make a double contribution in June to claim a larger tax deduction in 2025-26, the maximum deduction will now be $62,500 (up from $60,000). This excludes the use of any unused cap amounts from previous years.

The “contribution reserving strategy” strategy works by making two contributions in June; one of $30,000 which is allocated to the member’s account this financial year and a second of $32,500 which is allocated next financial year (by July 28) and thus tested against the cap in 2026-27 – the tax deduction, however, is allowed this year when the contributions are made.

To do this correctly, the trustee must resolve to defer the allocation of the contribution until July and lodge a Request to Adjust Concessional Contributions form with the ATO by the time the fund’s annual return and member’s tax return are lodged – otherwise it could be treated as an excess contribution.

Catch-up concessional contributions

If you intend contributing unused cap amounts from previous years this financial year to claim a larger tax deduction, this will not be affected by indexation as the higher $32,500 cap does not come into play until the 2026-27 financial year.

However, SMSF members combining the use of unused cap amounts with the above contribution reserving strategy, may be able to claim a tax deduction as high as $200,000.

It’s not often someone hasn’t contributed in five years to get to this sizeable amount, but it happens. For example, a retiree under age 67 who last worked before 2020-21 – or an expat who’s returned to Australia – now looking to reduce tax on a capital gain from an investment property.

To make catch-up concessional contributions this year, you must have had less than $500,000 in super at 30 June 2025.

Non-concessional contributions

From 1 July, you may be able to get more into super by making personal after-tax contributions as this cap is going up too.

The non-concessional contributions cap – currently $120,000 – is four times the concessional contributions cap. So, with that cap being indexed to $32,500, the non-concessional contributions cap increases to $130,000.

Your total super balance determines your eligibility to make non-concessional contributions and is equal to the transfer balance cap.

The transfer balance cap – the limit on the amount that can moved into super’s tax-free retirement phase – is linked to inflation.

From 1 July 2026, this cap increases to $2.1 million (up from $2 million) as the CPI index value for the December quarter (released a month ago) was high enough for it to be indexed.

With both caps increasing you may be able to make after-tax contributions from 1 July of at least $130,000 provided your total super balance is less than $2.1 million on 30 June 2026.

Non-concessional contributions bring-forward rule

Your total super balance also determines your eligibility to use the bring-forward rule to contribute more into super.

The higher non-concessional contributions cap from 1 July means that if you didn’t trigger the bring-forward rule in 2024-25 and do not trigger it this financial year – by contributing more than the $120,000 in either financial year – and their total super balance is less than $1.84 million at 30 June 2026 then you may contribute up to $390,000.

If you have $1.84 million to less than $1.97 million then you can contribute up to $260,000, otherwise the maximum you can put in is $130,000.

Of course, you cannot make a non-concessional contribution if your total super balance is $2.1 million or more.

Note that the thresholds for the bring-forward rule are higher from 1 July – they increase because they’re based on the transfer balance cap of $2.1 million less one or two-years’ worth of non-concessional contributions.

And if you’re in a bring-forward period, you don’t benefit from the increase until that period’s over – your contribution cap is limited to the amount you locked in.

Take Ron who made a non-concessional contribution of $200,000 in 2024-25. Being more than $120,000 and having a total super balance of $800,000 on 30 June 2024, he triggered the 3-year bring-forward period with an available cap of $360,000.

In 2026-27, Ron remains capped at $360,000 and can only contribute a further $160,000 – he doesn’t get the benefit of the increase until 2027-28.

Then there’s Jo who contributed $360,000 last December unaware of the probability of the caps going up. Her total super balance was $1 million on 30 June 2025.

Jo cannot make a non-concessional contribution until 2028-29 at which time she’ll benefit from the increase.

Voluntary employer (e.g. salary sacrifice) and personal contribution

To take advantage of the increased contribution caps from 1 July, you must be eligible to contribute.

Whilst there’s no work test for non-concessional contributions – just a total super balance test – there is for personal deductible contributions.

From age 67, you must meet the work test – 40 hours of gainful employment in 30 days – or work test exemption in the financial year to claim a tax deduction for a personal contribution.

To meet the work test exemption in 2026-27, you must meet the work test this financial year, have a total super balance of less than $300,000 at 30 June 2026, and not have used this exemption before.

Age matters when it comes to voluntary contributions (excluding downsizer contributions from selling your home) – they must be received no later than 28 days after the end of the month you turn 75.

The highly anticipated indexation of the contribution caps is music to the ears of people with surplus income or funds looking to boost their super.