July 2026 Superannuation Cap Adjustments: What They Mean for You
Indexed superannuation caps provide new opportunities to build tax-effective retirement savings.
From 1 July 2026, key superannuation caps will increase due to built-in indexation. The tax-free retirement phase transfer balance cap will rise from $2.0 million to $2.1 million, and annual contribution limits are expected to increase as well (pending final wage data).
These changes, driven by inflation and wage growth, provide opportunities to put more into superannuation's low-tax environment, but they also come with transitional rules to navigate.
Key Takeaways
Higher tax-free pension cap – $2.1 million limit allows more in tax-free retirement phase.
Contribution caps rising – Concessional cap likely $32,500; non-concessional $130,000.
Transitional rules apply – Those who maxed out caps may not gain immediate additional room.
Transfer Balance Cap Jumps to $2.1 Million
From 1 July, the general transfer balance cap will be $2.1 million. This is the maximum you can transfer into tax-free retirement phase accounts (like account-based pensions).
Anything above your cap must stay in accumulation (taxed 15% on earnings). The increase means retirees can keep more money in the 0% tax environment.
For example, under the $2.0m cap, if you retired with $2.1m in superannuation, you had to leave $100k in accumulation; with a $2.1m cap, you could put that full $2.1m into a tax-free pension, eliminating tax on that extra $100k's earnings.
Personal cap considerations: Each person has their own transfer balance cap.
If you already started a pension, your remaining cap space may increase on 1 July—but only if you hadn't fully used your cap before. The ATO applies proportional indexation: if you had used, say, 80% of your cap, you get 20% of the $100k increase added to your personal cap.
If you had used 100% (for example, you already have $2.0m in retirement phase), you won't receive any increase – your personal cap stays at $2.0m. In short, anyone who previously maxed out their cap does not get new pension space from this indexation.
Other implications: The higher general cap also shifts related thresholds.
Notably, to be eligible to make any non-concessional (after-tax) contributions in 2026–27, your total superannuation balance as at 30 June 2026 must be below $2.1 million (previously $2.0m).
If your balance is ≥ $2.1m, your non-concessional cap will be $0 for the year – meaning you can't contribute after-tax money without breaching the cap.
This change will reopen eligibility for some individuals; for example, someone with a $2.05m balance on 30 June 2026 was over the old limit but will be just under the new $2.1m threshold, allowing after-tax contributions again.
Contribution Caps – Higher Limits Ahead
Concessional contributions cap: Currently $30,000 per year (for 2025–26), this cap is expected to rise to $32,500 for 2026–27.
The exact figure will be confirmed when wage growth data (AWOTE) is released, but given recent trends it's very likely to increase.
From 1 July, you may be able to contribute an extra $2,500 pre-tax (via employer contributions, salary sacrifice, or personal deductible contributions) without exceeding the cap. If you aim to maximise concessional contributions, consider adjusting your salary sacrifice arrangements or personal contributions to take advantage of the higher limit.
Non-concessional contributions cap: This after-tax cap, currently $120,000 per year, would correspondingly increase to $130,000 if the concessional cap goes to $32.5k (since it's defined as 4× the concessional cap).
The bring-forward rule lets you use up to three years' worth of caps in one go, so with the higher caps you could contribute up to $390,000 at once (up from $360,000).
These larger after-tax contributions are available provided your total superannuation balance is under $2.1m at the end of this financial year, as noted above. If you're considering a big contribution (say from an inheritance or sale of an asset) and you're eligible, contributions from 1 July allows full utilisation of the updated caps within the new financial year, ensuring contributions are structured efficiently in line with the revised thresholds.
Transitional bring-forward rules: If you have already triggered a bring-forward period in an earlier year, the caps that applied when you triggered still govern your limit for the remainder of that period. The indexation doesn't increase your cap mid-stream.
For example, if you triggered the bring-forward in 2025–26, you're capped at $360k over that 3-year period – the new $130k annual cap (and $390k total) won't apply to you until that period is finished.
However, if you haven't used bring-forward yet and plan to, doing so on or after 1 July will let you leverage the higher caps. (In short, waiting until the new financial year for a large after-tax contribution can allow you to get more into superannuation.)
Carry-forward (unused concessional) contributions: Those eligible to carry forward unused concessional cap (total superannuation under $500k) can still do so, and the increased annual cap means a bit more headroom for catch-up contributions.
Unused amounts from past years aren't indexed, but they can be added on top of the new cap.
For instance, if you have $10k of unused concessional cap from 2025–26, in 2026–27 you could contribute $32.5k + $10k = $42.5k without breaching the cap. This helps people who took career breaks or had lower contributions in previous years to contribute more now under the higher limit.
What This Means for Your Superannuation Strategy
The July 2026 cap increases offer valuable opportunities to maximise tax-effective retirement savings, particularly for those who haven't yet fully utilised their existing limits. The introduction of indexation ensures these thresholds keep pace with inflation and wage growth over time.
Once the ATO formally confirms the updated caps following the release of February's wage data, our team will review the changes and their implications for clients approaching or exceeding these thresholds.
In the meantime, if you have questions about how these changes might affect your superannuation strategy, reach out to your MGD SMSF team or begin the conversation.
References
Australian Taxation Office Transfer Balance Cap and Contributions Caps official guidelines.
Disclaimer:
This article provides general information based on ATO guidelines and expected indexation. Financial Advice is provided by MGD Wealth Ltd. ABN 53 009 079 725, AFSL No. 222600.
Any advice included in this article is general and has been prepared without taking into account your objectives, financial situation or needs. As such, you should consider its appropriateness having regard to these factors before acting on it. Before you make any decision about whether to acquire or continue to hold a financial product, you should obtain and read the relevant product disclosure statement.
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