Super guarantee: no change to legislated rate rise (March 2025 Federal Budget Update)

Published on 26 March 2025 by Drew Pflaum
Categories: Government Budgets

The Budget did not announce any change to the timing of the next (and final) super guarantee (SG) rate increase.

The SG rate is currently legislated to increase from 11.5% to 12% on 1 July 2025. It has been gradually increasing by 0.5% each year since it was 9.5% in 2020-21.

The 12% rate from 1 July 2025 marks its final destination rate.

With the SG rate set to increase to 12% for 2025–2026 (up from 11.5%), employers need to be mindful that they cannot use an employee’s salary sacrificed contributions to reduce the employer’s extra 0.5% of super guarantee. The ordinary time earnings (OTE) base for super guarantee purposes now specifically includes any sacrificed OTE amounts. This means that contributions made on behalf of an employee under a salary sacrifice arrangement are not treated as employer contributions which reduce an employer’s charge percentage.

Super guarantee opt-out for high-income earners

The increase in the SG rate to 12% from 1 July 2025 also means that the SG opt-out income threshold will decrease to $250,000 from 1 July 2025 (down from $260,870). High-income earners with multiple employers can opt out of the SG regime in respect of an employer to avoid unintentionally breaching the concessional contributions cap ($30,000 for 2024–2025 and 2025–2026). Therefore, the SG opt-out threshold from 1 July 2025 will be $250,000 ($30,000 divided by 0.12).