Superannuation Tax: Labor to Pass Changes with Greens’ Support, Leaving Retirees at a Crossroads
On the parliamentary floor, the debate ended in a short, decisive moment: the Greens agreed to back Labor’s package, clearing the path for changes to the superannuation tax that target the very largest retiree balances. The agreement ends a three-year fight and sets the scene for further tax choices in the government’s upcoming federal budget.
What does the Superannuation Tax change mean?
The law will raise the concessional tax on earnings for the biggest superannuation accounts. Concessional tax on earnings for balances between $3m and $10m will double from 15% to 30%, and balances above $10m will face a new 40% rate. The package also removes the previously controversial proposal to tax unrealised capital gains, and indexes the $3m and $10m thresholds to inflation. At the same time, the government has increased the low-income superannuation tax offset from $310 to $810 and raised the eligibility threshold from $37, 000 to $45, 000 from 1 July 2027.
Why did the Greens back the bill?
The Greens framed their support as a strategic compromise. The party described backing the measures as a “down payment” on more substantial reform in the 12 May federal budget. Nick McKim, the Greens’ treasury spokesperson, said the decision to support the watered-down package was a green light for Labor to pursue “bold reform, ” naming scaling back the capital gains tax discount and changes to negative gearing as possible next steps. McKim added: “There is a massive Labor majority in the House of Representatives, the opposition is a rabble and the numbers are there in the Senate as long as Labor shows courage. The only limit is Labor’s level of ambition. “
At the same time, the Greens made clear their discomfort with parts of the package. The party welcomed the increase to the low-income offset but criticised other elements as a “capitulation to the wealthiest people in the country, ” reflecting internal tensions about settling for a narrower reform than initially proposed.
What comes next for broader tax reform and retirees?
With the Senate numbers secured, the changes to superannuation tax will become law, concluding a legislative battle that stretched across the government’s first term. Labor leaders first announced modest changes targeting the largest superannuation balances, and after facing criticism the government removed the plan to tax unrealised gains earlier in the process. The Greens’ support is explicitly cast as leverage: it is intended to push the government toward further measures in the budget, including potential reductions to the 50% capital gains tax discount and limits on negative gearing.
For retirees with the very largest balances the immediate effect is clear: higher tax rates on earnings above the set thresholds. For lower-income earners the package includes an increased offset and a higher eligibility threshold, a change the Greens said they welcomed. Whether the agreement marks the start of broader, permanent change will depend on the government’s appetite for more ambitious reforms in the 12 May federal budget and on the political dynamics in the months ahead.
Back in the chamber where the vote was sealed, the moment now carries a new weight. What began as a targeted change to the superannuation tax has become a political signal — a conditional bargain in which the Greens traded resistance for a promise of more sweeping reform. The law’s passage resolves one chapter, but for many retirees and would-be homeowners the question remains: will this down payment lead to the bolder changes advocates say are needed, or will it leave structural issues untouched?
