The tax on a superannuation withdrawal is zero once you turn 60, provided the money sits in a taxed fund, which is where most Australians’ super lives. Below 60, the rate depends on three things: your age, whether you take a lump sum or an income stream, and the internal split of your balance between its taxable and tax-free components. Untaxed public-sector schemes, early-access situations, and death benefits sit outside those defaults and carry their own rates.
The Split That Drives Every Rate
Before any rate applies, your super balance is divided into two components. The tax-free component is mostly non-concessional contributions you made from after-tax income. The taxable component covers employer contributions, salary sacrifice, personal deductible contributions, and investment earnings, all of which were already taxed at 15% inside the fund.1Australian Taxation Office. Tax on Super Benefits
Under the proportioning rule in section 307-125 of the Income Tax Assessment Act 1997, every withdrawal must reflect the same ratio of tax-free to taxable that your whole balance carries.2AustLII. Income Tax Assessment Act 1997 – Sect 307.125 – Proportioning Rule You can’t withdraw the tax-free money first and leave the taxable behind. If 30% of your balance is tax-free, then 30% of every dollar you pull out is tax-free too. The fund does the maths automatically, and the ratio is on your annual statement.
Age 60 or Over From a Taxed Fund
For members of a taxed fund, turning 60 removes tax on withdrawals entirely. Lump sums are tax-free. Income stream payments are tax-free. You don’t even report them as assessable income if super is your only income source.3Australian Taxation Office. Accessing Your Super to Retire The fund has already paid 15% on contributions and earnings across your working life, and no further tax is levied when the money comes out.
The transfer balance cap is a separate constraint on how much you can move into a tax-free retirement-phase pension account. From 1 July 2026, the general cap rises to $2.1 million.4Australian Taxation Office. General Transfer Balance Cap Indexation on 1 July 2026 Balance above that stays in accumulation, where fund earnings continue to be taxed at 15%. Withdrawing from accumulation after 60 is still tax-free at your end.
If Your Fund Is an Untaxed Public-Sector Scheme
Some public-sector employees belong to schemes where contributions and earnings were never taxed inside the fund. Tax therefore kicks in at withdrawal. At age 60 and over, the untaxed element of a lump sum is taxed at 15% plus the 2% Medicare levy up to the untaxed plan cap. The cap is $1,865,000 for 2025–26, rising to $1,935,000 from 1 July 2026. Anything above the cap is taxed at 45% plus Medicare levy.5Australian Taxation Office. Payments From Super The cap applies separately to each super provider, so members with multiple untaxed accounts need to plan across them.
Between Preservation Age and 60
Preservation age depends on your date of birth:6Australian Taxation Office. Conditions of Release
- Born before 1 July 1960: 55
- 1 July 1960 – 30 June 1961: 56
- 1 July 1961 – 30 June 1962: 57
- 1 July 1962 – 30 June 1963: 58
- 1 July 1963 – 30 June 1964: 59
- Born after 30 June 1964: 60
Anyone born after June 1964 has a preservation age of 60, so this bracket doesn’t apply and the tax-free-at-60 rules above take over instead.
Lump Sums From a Taxed Fund
A lifetime low rate cap applies to the taxable component. Amounts withdrawn up to that cap are taxed at 0%. Amounts above the cap are taxed at 15% plus the 2% Medicare levy (17% total), or your marginal rate, whichever is lower.5Australian Taxation Office. Payments From Super The cap is a lifetime figure, so every taxable lump sum you’ve taken since reaching preservation age counts toward it. The ATO indexes the amount periodically; check the current figure before a large drawdown.
Lump Sums From an Untaxed Fund
Untaxed-element lump sums in this age bracket are taxed more heavily. Up to the low rate cap: your marginal rate or 17% (including Medicare levy), whichever is lower. Above the low rate cap: your marginal rate or 32% (including Medicare levy), whichever is lower. Untaxed-element lump sums from a single provider that exceed the untaxed plan cap are taxed at the top marginal rate.1Australian Taxation Office. Tax on Super Benefits
Income Streams
Take a pension rather than a lump sum in this age band and the taxable component is added to your assessable income and taxed at your marginal rate. A 15% tax offset applies to the taxable component and meaningfully reduces the bill.7Moneysmart.gov.au. Tax and Super The tax-free component of any income stream payment is tax-free at any age.
Before Preservation Age
Early access to super is limited to specific hardship grounds, and the rates for approved withdrawals are the highest in the system. The taxable component from a taxed fund is taxed at 20% plus the 2% Medicare levy (22% total), or your marginal rate, whichever is lower.5Australian Taxation Office. Payments From Super The untaxed element is taxed at 30% plus Medicare levy up to the untaxed plan cap, and at the top marginal rate above it. The tax-free component always comes out tax-free.
If a severe financial hardship claim is approved before you reach preservation age plus 39 weeks, the release is capped at a single gross lump sum of $1,000 to $10,000, and only one payment is allowed in any 12-month period. After preservation age plus 39 weeks, there are no cashing restrictions on a hardship release.6Australian Taxation Office. Conditions of Release The fund withholds the tax before paying the net amount into your account.
Terminal Illness and Permanent Disability
A certified terminal medical condition makes the entire withdrawal tax-free regardless of your age or the taxable/tax-free split. The payment must be a lump sum, and the terminal condition must exist at the time of payment or within 90 days afterwards.8Australian Taxation Office. Access to Super for Members With a Terminal Medical Condition Benefits that accrue during the 24-month certification period are also unrestricted and tax-free. Anything left after the certification expires can still be accessed but may lose the tax-free treatment.9Australian Taxation Office. Access Due to a Terminal Medical Condition
For permanent incapacity, the fund recalculates the tax-free portion using an invalidity segment. A younger person forced out of work early ends up with a larger share of their benefit reclassified as tax-free, cutting the tax bill substantially. Whatever remains taxable is then taxed at the rates for the member’s age.
Death Benefits Paid to Beneficiaries
How a super death benefit is taxed depends almost entirely on who receives it. A death benefit dependant under tax law includes the deceased’s spouse or former spouse, any child under 18, anyone who was financially dependent on the deceased, and anyone in an interdependency relationship with them.10Australian Taxation Office. Paying Superannuation Death Benefits
A lump sum death benefit paid to a dependant is fully tax-free across every component. For a non-dependant, such as an adult child who wasn’t financially dependent, the rates on a lump sum are:
- Tax-free component: not taxed
- Taxed element: 15% plus Medicare levy
- Untaxed element: 30% plus Medicare levy
Death benefits cannot generally be paid as income streams to non-dependants. Foreign residents receiving death benefits pay the same rates but are generally exempt from the Medicare levy.10Australian Taxation Office. Paying Superannuation Death Benefits
First Home Super Saver Withdrawals
The FHSS scheme lets you withdraw voluntary contributions to buy your first home, up to $15,000 in any one financial year and $50,000 across all years. The releasable amount includes 100% of non-concessional contributions, 85% of concessional contributions, and associated earnings.11Australian Taxation Office. First Home Super Saver Scheme
The tax mechanism is different from a standard super withdrawal. The ATO withholds tax at your estimated marginal rate (including Medicare levy) minus a 30% tax offset, or at a flat 17% if it can’t estimate your rate. When you lodge, the assessable FHSS amount is included in your income and receives the 30% offset, which usually leaves the effective rate well below normal withdrawal rates. If you don’t buy a home and keep the released money instead of recontributing it, a flat 20% FHSS tax applies to the assessable amount.11Australian Taxation Office. First Home Super Saver Scheme
Departing Australia Superannuation Payment
Temporary residents who permanently leave Australia can claim their super as a Departing Australia Superannuation Payment. The rates are higher than standard withdrawal rates and depend on visa type. For standard temporary visa holders, DASP is taxed at 35% on the taxed element and 45% on the untaxed element, with no tax on the tax-free component.12Australian Taxation Office. Departing Australia Superannuation Payment DASP Anyone who held a Working Holiday Maker visa pays a flat 65% on contributions made while on that visa.13Australian Taxation Office. Working Holiday Makers