Turning 60 changes the tax treatment of your superannuation completely. If you withdraw from a taxed super fund after your 60th birthday, you pay no tax — whether you take a lump sum, an account-based pension, or a mix of both. This guide explains exactly what you keep in 2026, how the rules differ if you withdraw before 60, the $260,000 low-rate cap that applies to younger retirees, and the few exceptions (such as untaxed public-sector funds) where tax can still apply.
All figures below reflect the 2025-26 rules published by the Australian Taxation Office (ATO) and the MoneySmart service. Your own numbers depend on your fund type and the tax-free and taxable components of your balance — but the headline is simple: from a taxed fund at 60 or over, withdrawals are tax-free. For a personalised picture of your retirement income, try our super calculator.
The headline rule: no tax after 60 from a taxed fund
Most Australian employees are in taxed super funds — funds where contributions and earnings are already taxed inside the fund at 15% (concessional contributions) or 0% (non-concessional contributions). If that describes your fund, then from age 60:
- Lump sum withdrawals of the taxable component (taxed element) are tax-free.
- Income stream payments (account-based pensions) are also tax-free on the taxable component.
- The tax-free component of your super (non-concessional contributions, co-contributions, LISTO amounts) is tax-free at every age, with no exceptions.
This means a 62-year-old who retires with $650,000 in a taxed fund can withdraw $100,000 as a lump sum and keep the entire $100,000 — no income tax, no Medicare levy. A regular pension payment of $3,000 a fortnight is likewise paid in full, with no PAYG withholding. In fact, if your only income is a super pension from a taxed fund, you generally do not even need to lodge a tax return.
But first: can you actually access your super?
Reaching 60 does not automatically unlock your super. You must also meet a condition of release. The common ones are:
- Retired after 60: you retired from the workforce after your 60th birthday and don’t intend to return to work 10+ hours a week.
- Ceased employment after 60: you stopped a job after turning 60 — even if you start another job afterwards. Many people access super under this condition while still working elsewhere.
- Turning 65: super becomes fully accessible regardless of work status.
- Transition to retirement: from preservation age (60 for everyone born on or after 1 July 1964) you can start a TTR pension while still working — though only between 4% and 10% of the balance per year.
What you keep: worked examples
The table below compares the same $300,000 lump-sum withdrawal taken from the taxable component of a taxed fund at different ages.
| Age at withdrawal | Taxable component withdrawn | Tax payable | You keep |
|---|---|---|---|
| 57 (preservation age to 59) | $300,000 | $6,800 (17% on the $40,000 above the $260,000 lifetime cap) | $293,200 |
| 62 (retired) | $300,000 | $0 | $300,000 |
| 66 (any work status) | $300,000 | $0 | $300,000 |
Example 1 — wait and save. Maria is 62, retires, and moves her $650,000 balance to an account-based pension. She takes a $50,000 lump sum to clear a small debt and draws $40,000 a year as pension payments. Tax on all of it: $0. Over the year she keeps the full $90,000.
Example 2 — withdraw early, pay the price. James is 57, meets a condition of release, and takes a $300,000 lump sum from the taxable component of his taxed fund. The 2025-26 low-rate cap is $260,000 — a lifetime amount, not an annual one. The first $260,000 is tax-free; the remaining $40,000 is taxed at 17% (15% plus the 2% Medicare levy), which is $6,800. Had he waited until 60, the whole amount would have been tax-free — a strong argument for patience if the money isn’t urgently needed.
Withdrawal tax table: under 60 vs 60 and over
| Fund element | Between preservation age and 59 | 60 or over |
|---|---|---|
| Tax-free component (lump sum or pension) | Tax-free | Tax-free |
| Taxable component — taxed element (lump sum) | 0% up to the $260,000 lifetime low-rate cap; then your marginal rate or 17%, whichever is lower | Tax-free |
| Taxable component — taxed element (income stream) | Taxed at your marginal rate, with a 15% tax offset available | Tax-free |
| Taxable component — untaxed element (lump sum) | Your marginal rate or 17% (up to cap); marginal rate or 32% above the cap | May still be taxed — see untaxed funds below |
Source: ATO Tax on super benefits table, 2025-26; MoneySmart Tax and super.
The exceptions: when tax still applies after 60
The tax-free rule covers taxed funds — the industry, retail and corporate funds nearly all employees use. It does not fully cover:
- Untaxed funds: some older public-sector and government funds never paid tax on contributions or earnings. Withdrawals from these funds can still attract tax after 60 on the untaxed element, at your marginal rate or 32% (for lump sums above the low-rate cap), whichever is lower. If you’re in a defined-benefit public scheme, check which parts of your benefit are untaxed before you assume tax-free treatment.
- Death benefits to non-dependants: a lump-sum death benefit paid to a tax dependant (usually a spouse or minor child) is tax-free, but non-dependants are taxed on the taxable component.
- Illegal early access: illegally accessed super is taxed in full regardless of age or component.
What changes inside your super at retirement: the earnings tax bonus
There’s a second, less obvious benefit of crossing into retirement phase. While your money sits in accumulation phase, the fund pays up to 15% tax on investment earnings. Once you start an account-based pension (a retirement-phase income stream), earnings on assets supporting the pension are taxed at 0%, up to the transfer balance cap of $2 million per person for 2025-26.
On a $500,000 balance earning 6% a year, that’s the difference between $4,500 a year in earnings tax (accumulation) and zero (pension phase). Note the one exception: a transition-to-retirement pension still pays 15% earnings tax until you meet a full condition of release. Also be aware that from 1 July 2026, the new Division 296 tax adds 15% to earnings attributable to super balances above $3 million.
Once in an account-based pension, you must draw at least a minimum payment each year: 4% of the balance if you’re under 65, rising with age (5% at 65-74, 6% at 75-79, and so on up to 14% at 95+). There is no maximum — you can draw the whole balance if you wish.
Lump sum or pension: which should you take?
From a pure withdrawal-tax view, there’s no difference after 60 — both are tax-free. The real choice is about what happens next:
- Leave it in pension phase: your money keeps compounding in a 0% earnings-tax environment, and regular payments give you a predictable income.
- Take a lump sum: you gain full flexibility — clear debt, travel, help family — but money invested outside super is taxed at your personal marginal rates. On a large balance, the lost earnings-tax shelter can cost tens of thousands over a 20-30 year retirement.
Many retirees do both: a modest lump sum for immediate plans, with the bulk moved into an account-based pension for tax-free growth and regular income.
Frequently asked questions
Do I pay tax on super withdrawals after 60 in 2026?
No — if your super is in a taxed fund, lump sums and pension payments from the taxable component are tax-free from age 60. The tax-free component is tax-free at any age.
Do I need to lodge a tax return if my only income is a super pension?
Generally no. If all your income comes from a taxed fund after 60, there’s no assessable income to declare — though you may still need to lodge if you have other income sources.
What is the low-rate cap for 2025-26?
$260,000. It applies to lump-sum withdrawals of the taxable component taken between preservation age and 59, and it’s a lifetime cap — once used, it doesn’t reset. From 60, the cap becomes irrelevant because withdrawals are tax-free.
I’m 61 and still working — can I access my super?
Yes, if you’ve met a condition of release — for example, you ceased an employment arrangement after turning 60, even if you started another job. Otherwise, a transition-to-retirement pension lets you draw 4-10% of your balance while you keep working.
Are public-sector defined benefit funds tax-free after 60?
Not always. Untaxed funds (some government schemes) can still tax the untaxed element after 60. Check your fund’s product disclosure statement or ask your fund which components your benefit contains.
Does the Medicare levy apply to super withdrawals?
Not after 60 from a taxed fund — there’s no tax at all, so no Medicare levy either. Below 60, the concessional rates (17% and 22%) already include the 2% Medicare levy.
Conclusion
For most Australians, the message is straightforward: wait until 60, meet a condition of release, and every dollar you withdraw from a taxed super fund is yours to keep. Withdrawing in your late fifties can still be sensible in an emergency, but the $260,000 lifetime low-rate cap means you pay tax you could have avoided — 17% on anything above it — while the rest compounds in a 15% tax environment instead of a 0% one.
Before you pull the trigger, model your options: estimate your pension drawdown and how long your balance will last with our super calculator, and check your overall tax position with the income tax calculator. And because the tax treatment interacts with Centrelink, death-benefit nominations and (above $3 million) Division 296, it’s worth a conversation with a licensed financial adviser before you restructure.