TPD lump sum tax rates by age
| Your age at payment | Tax on taxable component |
|---|---|
| Under preservation age | Up to 22% (incl. Medicare) |
| 60 and over | Generally 0% (tax-free) |
The tax-free component of your benefit is never taxed. The taxable component is the portion the ATO can tax — and the rates above are the maximums. In practice the disability tax-free uplift usually shifts a large share of the payout into the tax-free bucket.
Why most claimants pay less than the headline rate
When a TPD benefit is paid from super, the ATO recalculates your tax-free component using a disability uplift — a formula based on your service period and the days remaining until age 65. This uplift can move tens of thousands of dollars out of the taxable component. See how to reduce TPD tax for the full strategy.
General information only — confirm your position with a licensed adviser.