Labor Greens Super Tax Deal have struck a deal to pass a new superannuation tax on very large balances, sparking a fierce national fight over fairness, aspiration, and what counts as “rich” in Australia. Under the compromise, earnings on super balances above 3 million dollars will be taxed more heavily from July 2026, while low‑income workers get extra support through a higher super tax offset, leaving both sides claiming a win and critics warning of broken promises and future tax grabs.
What is the Labor–Greens super tax deal?
After years of argument about how to rein in generous super tax breaks at the top end, Labor has secured Greens support for its redesigned “better targeted superannuation concessions” package. The legislation, marketed as the Building a Stronger and Fairer Super System Bill, is expected to pass the Senate with only Labor and Greens votes, with the Coalition firmly opposed.
Key elements of the deal, as reported by ABC News and Yahoo Finance, are:
- A higher tax rate on earnings for individuals with total super balances (TSB) above 3 million dollars, starting from 1 July 2026.
- A tiered system with a second threshold at 10 million dollars, where even higher effective tax applies.
- A commitment to increase the low income superannuation tax offset (LISTO) from a maximum of 500 dollars to 810 dollars, and lift the income threshold so more low‑paid workers benefit.
The Greens describe their backing as a “down payment” on deeper progressive tax reform in the upcoming budget, not an endorsement of everything Labor is doing. Business groups and the Coalition frame it as a tax grab that undermines the stability of super rules and penalises aspiration.
For a plain‑English outline of the measure from a tax and accounting perspective, see Update on the proposed 3m super balance tax.
What exactly changes in the super tax rules?
The new regime does not create a separate “super tax”: instead, it adds extra tax on certain earnings for people whose total super balance exceeds 3 million dollars, on top of existing rates.
According to the ATO’s summary of Better targeted superannuation concessions and Treasury statements:
- At present, earnings in accumulation phase are taxed at 15%, and earnings in retirement phase can be tax‑free up to the transfer balance cap.
- Under the new rules, if your total super balance is above 3 million dollars, an additional 15% tax will apply to part of your realised earnings above that threshold, effectively lifting the concessional tax rate on those earnings to 30%.
- For balances above 10 million dollars, a further 10% is added on a slice of earnings, taking the total concessional rate on that top slice to 40%.
Treasurer Jim Chalmers emphasises that the policy will still affect less than 0.5% of Australians – roughly one in 200 super fund members – and that both the 3 million dollar and 10 million dollar thresholds will be indexed alongside the transfer balance cap so bracket creep does not drag more people in over time.
For technical design detail – including the switch to taxing only “realised earnings” and the tiered structure – the Pitcher Partners explainer Update on the proposed 3m super balance tax and draft legislation summaries like Government releases 3m super tax reform draft legislation are helpful.
How did the proposal change to win Greens support?
Labor’s original 2023 concept was simpler – a flat extra 15% tax on all earnings linked to balances above 3 million dollars, including unrealised gains – but it drew heavy fire for complexity and fears of “taxing paper gains.” After consultation, Treasury and Labor redesigned the measure in 2025–26, with several concessions to critics and the Greens.
Key changes highlighted by ABC News and advisory firms are:
- Introducing a second 10 million dollar tier, with a higher effective rate on earnings above that amount.
- Moving from unrealised to realised earnings only, addressing concerns about volatile markets and cash‑flow problems for SMSFs holding property or unlisted assets.
- Indexing both thresholds in fixed increments (roughly 150,000 dollars for the 3 million dollar tier and 500,000 dollars for the 10 million dollar tier) to keep them aligned with rising caps and inflation.
- Pushing the start date back to 1 July 2026, with first ATO assessments expected in the 2027–28 financial year.
The Greens initially pushed for a lower threshold – Greens senator doubles down on lowering super tax threshold notes their advocacy for a 2 million dollar cut‑off or higher top rate – but ultimately agreed to support the 3 million / 10 million structure unamended.
Their media release Greens to back super changes as downpayment on real tax reform describes the deal as a compromise – less ambitious than they wanted, but still a step toward taxing very large balances more fairly and funding better support for low‑income workers.
Who is affected – and who isn’t?
Labor repeatedly stresses that the new tax is “targeted at the top” and will not touch the retirement savings of the vast majority of Australians. The ATO’s Better targeted superannuation concessions page and Treasury media releases spell out the distribution:
- Only individuals with a total super balance above 3 million dollars are directly affected – less than 0.5% of members in 2026–27.
- Around half of all Australians have super balances under 100,000 dollars, and many are still working part‑time or casual jobs.
- The median super balance at retirement is still well below 1 million dollars, especially for women and low‑income workers.
The Greens point out in their Australian Greens’ dissenting report that the current system delivers billions in annual tax breaks to the highest‑income decile, arguing that this reform is a small but necessary rebalancing.
However, critics warn that “today’s 3 million is tomorrow’s 2 million,” fearing future governments could ratchet down the threshold once the framework is in place. Articles like Labor lets the super wealthy off the hook show even the Greens have, at times, framed the revised model as too generous to the “richest 0.5%” by indexing thresholds and dropping the unrealised‑gains element.
The sweetener: higher super support for low‑income workers
To strengthen the fairness argument and secure Greens support, Labor paired the high‑balance tax with a boost for low‑income earners, many of whom are women in casual and part‑time work.
Under the deal, the Low Income Superannuation Tax Offset (LISTO) will:
- Increase from a maximum of 500 dollars to 810 dollars.
- Be available to people with taxable incomes up to 45,000 dollars, instead of 37,000 dollars.
ABC News’ explainer Labor tries again on super taxes, but yet to secure Greens support and the Treasurer’s release Reforms to support low-income workers and build a stronger super system spell out how this offset complements the broader super changes.
The Greens say two‑thirds of the extra LISTO support will go to women’s retirement accounts, helping close the gender super gap, and present this as a key reason they agreed to back the bill despite misgivings about other elements.
Why the deal is so controversial
The phrase “Labor Greens super tax deal” has quickly become a lightning rod in political debate because it cuts across several highly sensitive issues: trust in super rules, generational fairness, and perceptions of “class warfare.”
Critics raise several concerns:
- Broken promises: The Coalition argues Labor is breaking an election pledge not to change super tax concessions, and warns that taxing larger balances now opens the door to hitting smaller balances later.
- Retrospective feel: SMSF and wealth advisers say people who followed the rules for decades now find the tax settings shifted near retirement, even if the law is not technically retrospective.
- Fear of future threshold cuts: As covered in 3m super tax moves to Senate, Greens want 2m threshold, the Greens previously advocated for a 2 million dollar threshold, stoking fears that future negotiations could push the line down.
- Impact on investment and property: The Greens’ own release Labor lets the super wealthy off the hook warns that exempting unrealised gains and indexing thresholds could still let the richest 0.5% hoard investment properties; other critics suggest the opposite – that higher top‑end taxes may discourage productive investment via super.
Supporters counter that the status quo is unsustainable, with Parliamentary reports showing billions in tax breaks flowing to the top income decile each year while many low‑paid workers struggle to accumulate meaningful retirement savings. They argue the deal is a modest step toward rebalancing concessions, not a radical overhaul.
For a balanced news digest, ABC’s Labor to pass super tax changes with support of Greens and Yahoo Finance’s Major 3 million superannuation tax change gets green light are good starting points.
What this means for different types of Australians
Everyday workers and low‑to‑middle income earners
If your super balance is well below 3 million dollars, the new tax on high balances doesn’t touch you directly. In fact, if you earn under 45,000 dollars, the higher LISTO means more government contribution into your account each year.
Employer obligations are also rising independently: from 1 July 2025, the Super Guarantee rate has stepped up to 12%, meaning more compulsory contributions for workers over time. You can see these broader FY26 changes on AustralianSuper’s summary page FY26 Superannuation Changes for Employers.
These super changes also land at the same time as looming shifts to capital gains tax, which together could significantly change the after‑tax return profile for wealthy investors. If you hold property, shares or ETFs outside super as well, it’s worth reading Capital Gains Tax Changes 2026 Australia: Investor Alert to understand how potential CGT reforms might interact with this new super tax.
High‑balance super members
If your total super balance is above 3 million dollars, you’ll need to factor in:
- A higher effective tax on realised earnings above the threshold from 1 July 2026, with an extra 15% on the 3–10 million dollar slice and an extra 10% again for the 10 million dollar plus slice.
- The impact on your SMSF or public‑offer fund strategy, especially if you hold illiquid assets like direct property.
Technical guidance such as Update on the proposed 3m super balance tax and the ATO’s design notes will be essential reading for advisers and high‑balance members working through scenarios.
Younger Australians and generational fairness
The Greens and some policy analysts pitch the deal as a win for younger and lower‑wealth Australians, arguing that it reduces overly generous breaks at the top while boosting low‑income super and leaving room in the budget for services and housing policy.
Their messaging, echoed in posts like Greens say support for superannuation tax changes is a ‘down payment’, frames this as part of a broader push against intergenerational inequality. Whether future budgets deliver the “bolder tax reforms” they are demanding will be a key political test.
Practical steps if you’re concerned about the changes
If you think you might be in the affected group, or you simply want to understand the impact better, it helps to take a structured approach:
- Check your total super balance (TSB)
- Look at your most recent statements across all funds, or log into MyGov to see your ATO‑recorded TSB.
- If you are far below 3 million dollars, the high‑balance tax isn’t your immediate issue; focus instead on contribution strategies and fees.
- Read official guidance first
- Start with the ATO’s Better targeted superannuation concessions summary.
- Pair this with Treasury’s Reforms to support low-income workers and build a stronger super system for the government’s policy intent.
- Model scenarios if you’re over (or close to) 3 million
- Use independent calculators or advice and examples from Update on the proposed 3m super balance tax to see how the extra tax might play out.
- Consider how different investment strategies (growth vs income, more or less realised gains) could change your effective rate.
- Review your structure with a professional
- SMSF trustees and high‑balance members should consult a licensed adviser or tax professional familiar with Division 296 and the new rules.
- For many, the best response will be adjustment, not drastic moves like rushing to pull money out of super.