Concessional vs non-concessional contributions

How the two contribution types differ

Concessional contributions are pre-tax money. That includes employer Super Guarantee (12% from 1 July 2025), salary sacrifice from your gross pay, and personal contributions you claim as a tax deduction under section 290-170 of the ITAA 1997. Because the cash has not been taxed at your marginal rate on the way in, the fund pays 15% contributions tax when the money arrives — half or less of most working Australians' marginal rate.

Non-concessional contributions are after-tax money. You've already paid income tax on the cash — it might be from savings, an inheritance, the proceeds of an asset sale, or a personal contribution you deliberately don't claim as a deduction. Because the money is already taxed, no contributions tax applies when it enters super, and it lands in your tax-free component.

The 2026–27 caps reflect the different economic purposes of each. Concessional is capped at $32,500 per person because it's a tax subsidy — the government limits how much the deduction is worth. Non-concessional is capped at $130,000 (four times the concessional cap), or up to $390,000 in one year under the bring-forward rule, because it's just moving already-taxed money into a lower-tax environment.

The choice between the two typically comes down to your marginal tax rate. On the 30% bracket, a $10,000 concessional contribution saves you $1,500 in tax (30% marginal minus 15% fund tax). On the 45% bracket + 2% Medicare, the saving jumps to $3,200. Non-concessional saves nothing at the point of contribution — its value comes from earning at 15% (or 0% in pension phase) inside super instead of your marginal rate outside.

The two caps interact through Total Super Balance. Non-concessional is scaled down and eventually zeroed as TSB approaches $2.1m. Concessional carry-forward is only available under $500,000 TSB. And large concessional contributions build TSB over time, which eventually chokes off non-concessional headroom. Most trustees near retirement use both in sequence — max concessional in early years (deduction value), then shift emphasis to non-concessional in the final decade (moving after-tax capital into pension phase).

• Concessional: pre-tax, 15% fund tax, cap $32,500 (2026–27)
• Non-concessional: after-tax, no contributions tax, cap $130,000 (2026–27)
• Bring-forward: non-concessional only — up to $390,000 in one year
• Carry-forward: concessional only — 5-year unused cap if TSB under $500k
• SG (12%) always counts toward concessional cap
• Personal deductible contributions need a s.290-170 notice to the fund
• Excess concessional: taxed at marginal rate + interest, 15% offset
• Excess non-concessional: release + tax on earnings, or 47% if left in
• Both build TSB — impacts your $2.1m pension cap and Division 296 threshold