Australia’s superannuation system is often described as one of the world’s best, but making the most of it requires more than just the mandatory employer contributions. Concessional super contributions—those made with pre-tax dollars—are a powerful way to turbocharge your retirement savings and minimise your tax bill. With several rule tweaks and fresh opportunities in 2025, it’s the perfect time to review your strategy and ensure you’re maximising the benefits.
What Are Concessional Super Contributions?
Concessional contributions are payments into your super fund that come from pre-tax income. They include:
- Employer Super Guarantee (SG) contributions: The compulsory payments your employer must make (12% of ordinary time earnings in 2025).
- Salary sacrifice contributions: Additional voluntary contributions you ask your employer to make from your pre-tax salary.
- Personal deductible contributions: Contributions you make directly and claim as a tax deduction in your personal tax return.
All concessional contributions are generally taxed at 15% within your super fund, which is typically lower than most people’s marginal tax rate.
2025 Concessional Contribution Caps and Policy Changes
The rules around super contributions are always evolving. Here’s what’s new or notable for 2025:
- Contribution cap: The annual concessional contributions cap is $30,000 per person for 2025, up from $27,500 in previous years. This higher cap offers more room for tax-effective saving.
- Carry-forward unused cap: If your super balance is under $500,000 on 30 June of the previous financial year, you can use any unused concessional cap amounts from the last five years (dating back to 1 July 2018). This is especially valuable for those who’ve had career breaks or uneven incomes.
- Employer SG rate: The Super Guarantee rate has risen to 12% as of July 2025, meaning more compulsory savings going into your super—potentially freeing up more cap space for personal contributions.
- Division 293 tax threshold: For high-income earners, the income threshold for extra contributions tax remains at $250,000. Contributions above this threshold are taxed at 30% instead of 15%.
With these changes, Australians have more flexibility and incentive than ever to make the most of concessional contributions.
Why Consider Concessional Contributions?
There are several compelling reasons to maximise your concessional super contributions:
- Tax savings: Contributions are taxed at 15% in the fund, which is likely lower than your marginal rate. For example, if you earn $100,000, your marginal rate is 32.5% plus Medicare levy, so salary sacrificing extra super can save you thousands each year.
- Boosted retirement savings: Every dollar in super is invested and compounds over time. The earlier you contribute, the greater the long-term impact on your retirement nest egg.
- Flexible catch-up: The carry-forward rule means you can make larger contributions in years when your cash flow allows, such as after a property sale, inheritance, or bonus.
- Estate planning benefits: Super can be an efficient way to build wealth for future generations, with potential tax benefits for dependents.
Consider the example of Sarah, a 45-year-old with a $480,000 super balance and $10,000 of unused concessional cap carried forward from the last three years. In 2025, she could contribute up to $60,000 (her $30,000 cap plus $30,000 in carry-forward) and claim a significant tax deduction—giving her super a major boost.
Smart Strategies for 2025
Here’s how to get the most out of concessional contributions this year:
- Review your cap usage: Check your MyGov ATO portal or ask your fund for your year-to-date contributions, including any carry-forward balance.
- Set up salary sacrifice: Arrange with your employer to make regular, automated pre-tax contributions. This is a hands-off way to build your super and reduce taxable income.
- Consider a lump sum before 30 June: If you have spare cash or a windfall, a personal deductible contribution before the end of the financial year can help use up your cap and lower your tax bill.
- Watch the Division 293 threshold: If your income is close to $250,000, factor in the higher tax rate for contributions above this point when planning your strategy.
- Avoid exceeding the cap: Exceeding your concessional cap can trigger additional tax and administrative headaches, so always double-check your totals before making extra contributions.
With digital tools and improved ATO reporting, it’s easier than ever to track your super contributions in real time and avoid costly mistakes.
Looking Ahead: Superannuation and Your Financial Future
The 2025 changes to concessional super contributions reflect the government’s ongoing push to encourage Australians to take control of their retirement savings. With the cap now higher and catch-up rules in play, there’s never been a better time to review your approach. Whether you’re focused on tax savings, retirement planning, or just building a bigger nest egg, understanding how concessional contributions work—and how to use them strategically—can make a real difference to your financial future.
