Key pension, income and tax changes for FY 2026-27

For members who are receiving income from an account-based pension, the minimum annual payment may have increased on 1 July 2026, depending on your age and account balance. 

• The minimum annual payment you are required to receive each year is re-calculated on 1 July by multiplying your account balance by the minimum drawdown rate that applies based on your age on that date. 
• The rate increases with age.
• You may receive additional payments as the rate sets the minimum annual payment, not the maximum. 

The maximum amount that can be transferred into a tax-free retirement pension increased.

• The general transfer balance cap increased from $2 million to $2.1 million.
• The increase applies to people starting a retirement-phase income stream for the first time from 1 July.
• Some retirees may be eligible for a proportional increase in their personal transfer balance cap depending on how much of their cap they have previously used. 
  If you have previously transferred the maximum amount, you are not eligible for any further indexation.

Learn more about the transfer balance cap.

The defined benefit income cap for certain capped defined benefit income streams increased.

• On 1 July 2026 the cap increased from $125,000 to $131,250 a year.

New tax rules for people with very large super balances came into effect. While it affects only a small proportion of Australians, it applies to an individual’s total super balance including retirement-phase income streams as well as accumulation balances.

• Division 296 now applies to individuals with total super balances above $3 million.
• An additional 15% tax applies to earnings attributable to the portion of a balance above $3 million, bringing the maximum tax on super earnings in this range to 30%. 
• For balances above $10 million, a further 10% tax applies on earnings attributable to amounts above that threshold.

Learn more about Division 296.

Maximum pension payments did not change as they are indexed in March and September each year.

While deeming rates did not increase on 1 July, the financial asset thresholds at which the higher deeming rate applies increased, which may reduce the deemed income assessed by Centrelink. Deeming applies to most account-based pensions and could slightly increase social security benefits for some recipients.   

• For singles: the lower 1.25% deeming rate now applies to the first $66,800 of relevant financial assets.
• For couples where at least one partner receives a pension: the lower 1.25% deeming rate applies to the first $110,600 combined.
• For couples where neither partner receives a pension: the lower 1.25% deeming rate applies to the first $55,300 each, based on each person’s own financial assets and their share of joint financial assets.
• Amounts above these thresholds are deemed to earn 3.25%. 

The Government delivered the first stage of its planned personal income tax cuts.

• The tax rate on taxable income between $18,201 and $45,000 reduced from 16% to 15%, with a further reduction to 14% scheduled from 1 July 2027.
• Eligible taxpayers could receive up to $268 in tax savings in 2026-27, expected to increase to up to $536 from 2027-28.

Income shade-out and cut-out thresholds for the Seniors and Pensioners Tax Offset (SAPTO) increased.

• More seniors and pensioners may be eligible for the offset, and eligible seniors and pensioners may continue receiving SAPTO at higher rebate income levels than previously.

The Government increased Medicare levy low-income thresholds by 2.9% for the 2025-26 financial year.

• The changes mean some low-income earners may pay less Medicare levy, or none at all.
• The threshold for single seniors and pensioners increased to $44,268 and the threshold for senior and pensioner families increased to $61,623.

Capital Gains Tax reforms that aim to ensure investors pay tax on real (inflation adjusted) capital gains accruing from 1 July 2027 have been legislated. The changes will apply to most CGT assets outside super, including property and shares but generally do not apply to the family home.

• The 50% CGT discount on investments held for more than 12 months will be replaced by CPI indexation from 1 July 2027 and a new minimum 30% tax on realised capital gains.
• Transitional rules will apply for assets purchased prior to 1 July 2027, with the existing 50% individual CGT discount applying to capital gains that accrued up until 30 June 2027.
• If you receive an income support payment such as the Age Pension in the same year you realise capital gains that accrued from 1 July 2027, you will not be subject to the 30% minimum tax rate rule.