What is Concessional Contributions?

What "concessional" means

Concessional, at a concession, a discount. Instead of being taxed at your marginal income tax rate, these contributions are taxed at a flat 15% once they land in your fund. On a $90,000 salary, where your combined marginal rate including the Medicare levy sits around 32%, a concessional contribution is taxed at 15% instead, a 17 cent saving on every dollar. The higher your income, the bigger that gap gets, up to the point Division 293 kicks in (more on that below).

The three types

• Employer Super Guarantee (SG). Compulsory, 12% of your ordinary time earnings for 2026-27, paid automatically by your employer, see our superannuation glossary page for how the broader system works.
• Salary sacrifice. You agree with your employer to redirect part of your pre-tax salary into super before income tax is calculated on it. See our salary sacrifice glossary page and Salary Sacrifice Calculator for the mechanics.
• Personal deductible contributions. If you're self-employed, a contractor, or your employer doesn't offer salary sacrifice, you can contribute from your own bank account and claim a tax deduction. You need to lodge a notice of intent to claim a deduction (ATO form NAT 71121) with your fund before lodging your tax return, and get it acknowledged first, otherwise the ATO treats it as a non-concessional contribution instead.

A common mix-up

Salary sacrifice is one type of concessional contribution, not the whole category. Employer SG and personal deductible contributions are the other two, and all three share the same annual cap. If your employer already pays $12,000 in SG on a $100,000 salary, that $12,000 comes out of your $32,500 cap before you've salary sacrificed a single dollar, leaving $20,500 of room, not the full cap.

The 2026-27 cap

The concessional contributions cap for 2026-27 is $32,500, up from $30,000 the year before, and it covers everything: SG, salary sacrifice, and personal deductible contributions combined, regardless of your age. It's indexed to average weekly ordinary time earnings and moves in $2,500 steps roughly every couple of years, so confirm the current figure at ato.gov.au before relying on it for a real decision.

What it's worth, roughly

For 2026-27, Australian resident tax brackets are 0% up to $18,200, 15% from $18,201-$45,000, 30% from $45,001-$135,000, 37% from $135,001-$190,000 and 45% above $190,000, plus the 2% Medicare levy on most of that. Compare those combined rates against the flat 15% super pays and the saving becomes clear the higher you earn: on the $45,001-$135,000 band, you're swapping a 32% combined rate for 15%, roughly a 17 cent saving per dollar. On the top band, above $190,000, that gap widens to around 32 cents per dollar, though Division 293 (below) claws some of that back for higher earners.

Worked example: on a $90,000 salary, sacrificing an extra $10,000 into super instead of taking it as income saves roughly $1,700 in tax that year, the gap between the 32% combined marginal rate and the 15% contributions tax.

Division 293 tax, for high earners

If your income plus concessional contributions goes over $250,000, a threshold that's stayed fixed since 2017 with no indexation, the ATO applies an extra 15% tax on the contributions above that threshold, effectively 30% instead of 15% on that portion. Say you earn $240,000 and contribute the full $32,500 cap, that's $272,500 combined, $22,500 over the threshold, and 15% of that is $3,375 in extra tax. The ATO works this out and notifies you after your return is lodged, it's not something you calculate yourself upfront.

Carry-forward: catching up after a quiet year

If you haven't used your full cap in a previous year, you may be able to contribute more than the standard annual cap by using unused space carried forward from up to the previous five financial years, provided your total super balance was under $500,000 at the last 30 June. Unused amounts are used oldest first and expire after five years, so cap space from 2020-21 can no longer be carried forward from 1 July 2026 onward. It's a useful lever after a career break, a stretch of part-time work, or a lean year for a self-employed contributor. Run the numbers on our Salary Sacrifice Calculator before committing to a top-up amount.

Going over the cap

Excess concessional contributions get added to your assessable income and taxed at your marginal rate, with a 15% offset since the fund has already paid tax on it, so you're not double taxed, just topped up to your marginal rate. On a 32% marginal rate, a $5,000 excess costs an extra 17% of $5,000, or $850. The ATO sends an excess concessional contributions determination once it's worked out, and you can elect to release some of the excess from your fund to help pay the resulting tax bill.