Putting extra money into super could save you thousands of dollars in tax. But if you’re trying to retire early, there’s a catch: you generally can’t touch that money until you’re 60.
For the 2026-27 financial year, you can contribute up to $32,500 in concessional contributions, including the super your employer pays on your behalf. Depending on your salary, you might have plenty of room to make additional contributions – or find your employer has already used most of the cap.
Working out how much to contribute means weighing up the potential tax savings against the need to keep money accessible. Here’s how the cap works, when you can contribute more and how to balance super with investments you can draw on before retirement age.
What counts towards the $32,500 cap?
Concessional contributions are payments into super that receive concessional tax treatment. They include:
- Employer super contributions: Compulsory Superannuation Guarantee (SG) payments count towards your cap. The SG rate is 12%, subject to the applicable earnings rules and maximum contribution base.
- Salary sacrifice: If you arrange for your employer to direct part of your pre-tax salary into super, salary sacrifice contributions count towards the same limit.
- Personal deductible contributions: You can contribute money from your bank account and claim a tax deduction, provided you meet the eligibility requirements and lodge a valid notice of intent with your super fund.
Other employer contributions may count, too. Contributions are generally counted in the financial year your super fund receives them, so check the timing if you’re making a payment close to 30 June.
How much room do you have left?
Your salary and existing contributions determine how much extra you can put into super without exceeding the cap.
For 2026-27, employers only have to pay super on the first $270,830 of an employee’s annual earnings. At the 12% super rate, that means the maximum compulsory employer contribution is about $32,500 a year.
Someone earning $120,000, by comparison, would receive $14,400 in employer contributions if the full salary attracts SG at 12%. That leaves $18,100 of the standard cap available for additional concessional contributions, assuming there are no other contributions to account for.
You can check your reported contributions and available cap amounts through ATO online services via myGov.
How the tax savings work
The main attraction of concessional contributions is that money going into super is generally taxed at 15%, rather than at your personal marginal income tax rate. The difference can be substantial for higher-income earners.
Consider someone whose marginal income tax rate is 30%, plus the 2% Medicare levy. If they make an eligible $10,000 concessional contribution, the income tax they would otherwise pay on that amount could be around $3,200, compared with $1,500 in contributions tax inside super. That’s a potential difference of $1,700, before considering other tax effects and individual circumstances.
The benefit generally increases as your marginal tax rate rises, although the calculation changes for people subject to additional super taxes.
There are a few things to keep in mind:
- Your money is preserved: You generally can’t access super until you meet the applicable age and conditions of release.
- Investment earnings are taxed differently: Earnings in accumulation-phase super are generally taxed at up to 15%, while eligible retirement-phase pension earnings may be tax-free, subject to the applicable rules and limits.
- Fees and investment performance matter: The tax treatment is only one part of the comparison between super funds and investments held in your own name.
What if you earn more than $250,000?
Division 293 tax reduces the concession for some higher-income earners.
If your income for Division 293 purposes plus your relevant concessional contributions exceeds $250,000, you may pay an additional 15% tax on the affected contributions. This can bring the contributions tax rate on that portion to 30%, narrowing the gap between super and your marginal income tax rate.
It doesn’t necessarily eliminate the benefit of contributing, but it does change the calculation. Your income, existing super contributions and plans for accessing the money all matter. The ATO’s Division 293 guidance explains how the additional tax is assessed.
Using unused concessional contributions
If you haven’t used your full concessional contributions cap in previous years, you may be able to carry forward the unused amounts and contribute more than $32,500 in 2026-27.
To qualify, your total super balance must have been below $500,000 on 30 June 2026. You can use unused cap amounts from the previous five financial years, with the oldest available amounts applied first.
The previous caps were:
- $27,500 for 2021-22, 2022-23 and 2023-24
- $30,000 for 2024-25 and 2025-26
Unused amounts from 2021-22 expire after the end of 2026-27. If you have any remaining from that year, this is your last financial year to use them.
Carry-forward contributions can be particularly useful if your income has increased, you’ve received a bonus or you’ve had a year with a large capital gain. You may be able to make a larger deductible contribution when your marginal tax rate is higher, provided you meet the eligibility requirements.
Check your available amounts through ATO online services before making a contribution. Your fund must also receive the money in time for it to count in the intended financial year.
Planning for early retirement: super and investments outside super
Super can be an effective way to build retirement savings, but its access rules matter if you want to retire before 60.
Most Australians can access super from age 60 once they meet a condition of release, such as retiring after reaching preservation age. Until then, you’ll generally need another source of income to cover your expenses.
This is where investments held outside super come in. Often called bridge wealth, these assets can help fund the years between leaving work and accessing your super.
A portfolio of diversified ETFs held in a personal investment account is one option. You can sell investments when you need the money, although selling may trigger capital gains tax.
How much should go into each?
There’s no single allocation that suits everyone. Your retirement age, income, existing super balance and expected living costs all affect the decision.
Consider three questions before deciding how much to contribute:
- When do you want to retire? Someone planning to work until their mid-60s may have less need for a large pool of accessible investments than someone hoping to stop working at 50.
- How much of your concessional cap is already used? Check your employer contributions before deciding how much extra to contribute.
- How much tax would you save? The difference between your marginal tax rate and the tax on super contributions can help you assess the benefit, including whether Division 293 applies.
Putting the numbers into practice
The $32,500 concessional contributions cap gives you room to build retirement savings with potentially favourable tax treatment, but employer contributions may already account for a significant portion of it.
Check how much of your cap remains, whether you’re eligible to carry forward unused amounts and how additional contributions would affect your tax position. If you’re aiming for early retirement, factor in the accessible investments you’ll need before super becomes available.
For 2026-27, it’s also worth checking whether you have unused cap amounts from 2021-22, as these expire at the end of the financial year.
Super and investments outside super serve different purposes. Understanding how they work together can help you make better decisions about where your next contribution should go.
Disclaimer: This article is general in nature and has been prepared without taking into account your individual objectives, financial situation or needs. It does not constitute financial, tax or superannuation advice, and nothing in it should be relied upon as a recommendation to make or change superannuation contributions or investment decisions. Tax outcomes and eligibility for concessional contributions, including carry-forward amounts, depend on your individual circumstances and may be affected by changes to superannuation and tax laws. Before making decisions about your superannuation contributions or investments, consider whether the information is appropriate for you and seek professional advice from a qualified financial adviser or registered tax agent.
