What is the new Concessional Superannuation Contribution Cap for 2025/26?

The Concessional Contributions Cap (pre-tax) for the 2025/26 financial year has been indexed to $30,000.

What are the new marginal tax brackets for Australian residents starting in 2025/26?}

What are the new marginal tax brackets for Australian residents starting in 2025/26?

Deeper Dive: Navigating Australia's Comprehensive Tax and Superannuation Landscape for 2025/26

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The Australian financial year 2025/26 heralds a crucial period of change and adjustment for taxpayers across all sectors. To plan effectively for the coming year, a thorough understanding of the updated rates, thresholds, and caps is essential. This expanded guide provides a detailed look at the core figures governing personal income tax, superannuation strategies, and corporate obligations.

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Section 1: The New Structure of Individual Income Tax

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Resident Tax Rates

The income tax brackets for Australian residents undergo a fundamental change in 2025/26, impacting every income earner. The following table outlines the marginal tax rates (excluding the 2% Medicare Levy):

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Taxable IncomeTax on Base AmountMarginal Tax Rate (on excess)$0 to $18,200NilNil$18,201 to $45,000Nil16%$45,001 to $135,000$4,28830%$135,001 to $190,000$31,28837%$190,001 and over$51,63845%

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Non-Resident and Working Holiday Makers

Non-residents and Working Holiday Makers are subject to different tax tables:

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Taxable Income (Non-Residents)Tax Rate (on excess)$0 to $135,00030%$135,001 to $190,00037%$190,001 and over45%

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Tax Offsets and Levies

Low Income Tax Offset (LITO): The maximum LITO remains at $700, available for incomes up to $37,500. It phases out for incomes above $37,500 and is zero for incomes of $66,668 or more.
Medicare Levy Thresholds: The general threshold below which individuals may not have to pay the 2% Medicare Levy is $27,222 for individuals. A phase-in rate applies up to the upper limit of $34,027. Higher limits are provided for families and those eligible for the Senior and Pensioner Tax Offset (SAPTO).
Medicare Levy Surcharge (MLS): This surcharge, imposed on higher-income earners who do not have appropriate private health insurance, remains unchanged in terms of income tiers, starting at $101,001 for singles and $202,001 for families, with rates ranging from 1% to 1.5%.

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Section 2: Superannuation: Building Your Nest Egg

The superannuation environment continues its evolution with key caps being indexed, directly affecting retirement planning.

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1. Contribution Caps

The limits on annual contributions have been adjusted for 2025/26:

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Contribution TypeAnnual CapKey RuleConcessional (Pre-tax)$30,000Subject to 15% contributions tax (or Division 293 tax if income exceeds $250,000).Non-Concessional (After-tax)$120,000Subject to the 'bring-forward' rule, allowing up to $360,000 over three years, provided eligibility conditions (including age and Total Superannuation Balance) are met.

Carry-forward Concessional Contributions

Members whose Total Superannuation Balance (TSB) was less than $500,000 at June 30 of the previous financial year can utilise any unused portion of their Concessional Contributions cap from the previous five years.

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2. Retirement Balance Caps

Eligibility for making certain contributions and the amount that can be transferred into the tax-free retirement phase are governed by these caps:

Cap Name2025/26 LimitPurposeTransfer Balance Cap (TBC)$2.0 millionThe maximum amount an individual can transfer into the tax-free Retirement Phase.Total Superannuation Balance (TSB) Cap$2.0 millionRelevant for determining eligibility for non-concessional contributions and the carry-forward rule.

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3. Superannuation Guarantee (SG) and Preservation

Super Guarantee Rate: The mandated employer contribution rises to 12.0% of an employee's ordinary time earnings. The maximum quarterly earnings base on which SG is calculated is $62,500.
Preservation Age: The age at which you can access your super without meeting a condition of release (like retirement) is now 60 for anyone born from July 1, 1964, onwards.

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4. Taxation of Superannuation Benefits

The tax treatment of super lump sums and income streams depends heavily on the recipient's age. For those 60 and over, both income streams and lump sums from a 'taxed' source are generally non-assessable and non-exempt (tax-free).

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Section 3: Business and Corporate Taxation

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Corporate Tax Rates and Franking

The company tax rate depends on its aggregated turnover and the nature of its income:

25% Rate (Base Rate Entities): Applies if a company has an aggregated turnover of less than $50 million and no more than 80% of its assessable income is passive income (e.g., dividends, rent, interest).
30% Rate (Other Companies): Applies to all other companies.

The maximum franking rate for dividends paid in 2025/26 is tied to the prior year's turnover, allowing Base Rate Entities to frank at 25% and other companies at 30%.

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Business Deductions and Depreciation

Instant Asset Write-off: Small businesses (aggregated turnover less than $10 million) can immediately deduct the full cost of eligible business assets costing $20,000 or less.
Motor Vehicle Depreciation Cost Limit: The maximum cost for luxury car depreciation remains at $69,674 for the 2025/26 financial year.

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Division 7A and FBT

Division 7A Benchmark Interest Rate: This rate is crucial for loan agreements between private companies and shareholders/associates, setting the minimum interest repayment required to avoid having the loan treated as an unfranked dividend. The rate for 2025/26 is 8.37%.
Fringe Benefits Tax (FBT): The FBT rate remains at 47% for the year ending March 31, 2026, aligned with the top marginal income tax rate.

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Conclusion

The 2025/26 financial year brings key shifts across personal, superannuation, and corporate tax spheres. From the restructuring of individual tax brackets to the indexing of contribution caps, these changes demand careful review. Whether you are planning your personal finances, managing a business, or optimising your retirement savings, staying informed on these definitive thresholds is the first step toward sound financial management.

Disclaimer: This information is a detailed summary of the Australian tax and financial thresholds relevant to the 2025/26 financial year. Tax legislation is complex and subject to interpretation. This content is for general information only and should not be considered professional tax, legal, or financial advice. Always consult with a qualified professional to confirm how these rates and rules apply to your specific circumstances.

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