Superannuation Reforms to Support Low-Income Workers
The Albanese Labor government announced major superannuation reforms on 13 October 2025, boosting support for low-income workers whilst better targeting tax concessions on large balances.
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Term 2
The government will increase the Low Income Superannuation Tax Offset (LISTO) by $310 to $810 and raise the eligibility threshold from $37,000 to $45,000 from 1 July 2027. This change will help deliver more secure retirements for 1.3 million Australians, of which around 60 per cent are women, with the total number of Australians eligible for LISTO increasing to 3.1 million. The reform will benefit all workers with incomes between $28,000 and $45,000, with an average increase in the LISTO payment of $410. These workers could receive a potential benefit at retirement of around $15,000 in today's dollars, depending on individual income over their career. The LISTO boost ensures low-income workers receive fairer tax concessions on their super contributions, aligning with the government's third round of tax cuts taking effect in 2027.
The government also made practical changes to its policy for better targeting superannuation concessions on large balances, taking two years of feedback into account. From 1 July 2026, a two-tier system will apply: the total concessional tax rate on earnings for balances between $3 million and $10 million will be 30 per cent, whilst earnings on balances over $10 million will be taxed at 40 per cent. Both the $3 million and $10 million thresholds will be indexed to maintain relativity with the Transfer Balance Cap. Critically, the government adjusted the earnings calculation so concessional tax rates on large balances only apply to future realised earnings (not unrealised gains), addressing a major concern from the original proposal. The policy will affect less than 0.5 per cent of all Australians in 2026–27, with around 8,000 Australians holding more than $10 million in super.
Summary:
LISTO increases from $500 to $810 with eligibility threshold rising from $37,000 to $45,000, benefiting 1.3 million Australians (60% women) from July 2027
Two-tier tax system from July 2026: 30% on earnings for balances $3m-$10m, 40% on earnings over $10m, both thresholds indexed
Tax applies only to realised earnings (not unrealised gains), affecting less than 0.5% of Australians, with 14 times more people benefiting from LISTO boost
[3] https://alp.org.au/news/reforms-to-support-low-income-workers-and-build-a-stronger-super-system/
Headline: Fairer Super: More Support for Low-Income Earners
Summary: From July 2027, LISTO increases to $810 (from $500) with eligibility rising to $45,000 income, benefiting 1.3 million Australians. From July 2026, new tax tiers apply to large balances: 30% on earnings between $3m-$10m, 40% over $10m, with both thresholds indexed.
Key figures:
LISTO boost to $810 benefits 1.3 million Australians (60% women)
Potential $15,000 extra at retirement for affected workers
Less than 0.5% of Australians affected by large balance taxes
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