First Home Super Saver Scheme Explained 2026

Most first home buyers have never heard of the First Home Super Saver Scheme. That is a shame, because it is one of the most effective tax-saving tools available to Australians saving for a deposit. Used properly, it can save you around $7,500 in tax over three years at the 30% tax rate (more than $15,000 for a couple) while building your deposit inside super at a concessional rate.

This guide explains exactly how it works, the numbers behind it, and whether it makes sense for your situation.

How the FHSS Scheme works

The core idea is simple: instead of saving for your deposit in a bank account from your after-tax income, you make voluntary concessional (before-tax) contributions into your super fund. Those contributions are taxed at just 15% inside super, rather than your full marginal income tax rate. When you are ready to buy, the ATO releases the money back to you as a deposit.

If you earn between $45,000 and $135,000, your marginal tax rate is 30% (plus a 2% Medicare levy). Every dollar you salary sacrifice into FHSS is taxed at 15% rather than 32%, saving you 17 cents per dollar. On a $15,000 annual contribution, that is roughly $2,550 in tax saved each year.

The annual and lifetime caps

You can contribute up to $15,000 per financial year under the FHSS scheme, and a maximum of $50,000 per person over your lifetime. Couples each have their own cap, so together you can shelter up to $100,000 in contributions.

Contributions must be voluntary and concessional. That means salary sacrifice (arranged through your employer) or personal deductible contributions (if you are self-employed or make contributions yourself and claim a tax deduction).

The 85% release ratio and deemed earnings

Here is where things get slightly technical. When you apply for an FHSS release, the ATO does not hand back every dollar you contributed. Instead, they release 85% of your concessional contributions plus deemed earnings calculated at the ATO Shortfall Interest Charge (SIC) rate, which is currently7.51% per year and is reset each quarter.

Why 85%? Because 15% was already withheld as contributions tax inside super. The deemed earnings (rather than your fund's actual returns) prevent your super fund's investment performance from affecting the release amount, which keeps things consistent and predictable.

Illustrative example: on $45,000 in total contributions over three years, you would receive approximately $38,250 (85%) plus around $4,770 in deemed earnings at the current SIC rate, bringing the total releasable amount to roughly $43,020. The deemed earnings change with the SIC rate each quarter.

Withdrawal tax: the 30% offset

When the ATO releases your FHSS funds, the assessable amount is added to your taxable income for that year. However, the ATO also applies a 30% tax offset on that assessable amount, which dramatically reduces (or eliminates) the withdrawal tax for most earners.

For someone in the 30% marginal bracket, the offset cancels the income tax on the release: 30% tax minus 30% offset equals zero, leaving only the 2% Medicare levy. For higher-income earners in the 37% bracket, the withdrawal tax is about 7% plus Medicare. This means the effective net benefit of the scheme is substantial regardless of income level.

Three worked scenarios

Scenario 1: Single earner on $80,000 (3 years)

Sarah earns $80,000 and salary sacrifices $15,000 per year for three years. Her employer contributes 12% SG ($9,600/year), leaving$22,900 of concessional room, comfortably above the $15,000 FHSS cap.

• Total FHSS contributions over 3 years: $45,000
• Tax saved during contribution phase: about $7,650 (17% × $45,000)
• Releasable amount: about $43,020 (85% + deemed earnings)
• Withdrawal tax: about $860 (the 2% Medicare levy; the 30% offset cancels the 30% tax rate)
• Net cash in hand after release: about $42,150

Compare this to saving from after-tax pay: $15,000 of pre-tax income at a 32% marginal rate (including Medicare) becomes just $10,200 in the bank each year. Over three years, that is $30,600. The FHSS route delivers roughly $11,500 more toward Sarah's deposit.

Scenario 2: Couple, both earning $90,000

James and Emma each earn $90,000 and both salary sacrifice $15,000 per year for three years. Each is in the 30% marginal bracket.

• Combined contributions: $90,000 ($45,000 each)
• Combined tax saved: about $15,300
• Combined net release: about $84,310
• Withdrawal tax for each: about $860

An $84,310 tax-advantaged deposit boost over three years, without touching any savings in the bank. For a couple buying at $750,000, this could represent more than 11% of the purchase price, stacked on top of their regular savings.

Scenario 3: Tighter budget, lower contribution ($42,000 income)

Liam earns $42,000, just below the $45,000 bracket threshold. His marginal rate is 15%, the same as the 15% super contributions tax (only about 2 percentage points apart once the Medicare levy is included). The tax saving per dollar contributed is minimal, and the scheme adds complexity without much financial benefit at this income level.

If Liam can get a salary increase or salary sacrifice closer to $50,000, his marginal rate jumps to 30% and the FHSS benefit becomes substantial. For now, a high-interest savings account may be a simpler path.

FHSS delivers its strongest benefit for earners in the 30% bracket (income between $45,000 and $135,000), where the withdrawal income tax is largely offset by the 30% credit.

The concessional cap gotcha

There is one critical interaction that catches people off guard. The total concessional contributions cap is $32,500 per year, and this includes your employer's Super Guarantee payments.

At a $100,000 salary, your employer pays $12,000 in SG, leaving $20,500 of room for voluntary salary sacrifice. Since the FHSS cap is $15,000, you are fine, and the same is true at a $135,000 salary, where SG is $16,200 and $16,300 of room is left. The cap starts to bite for salaries above about $145,800. At a $160,000 salary, SG is $19,200, leaving only $13,300 of room, which is less than the $15,000 FHSS maximum. In that case, you can only contribute $13,300 per year without breaching the concessional cap and facing extra tax.

Always confirm the available concessional headroom with your payroll team or a financial adviser before setting up salary sacrifice.

ATO process and timeline

The release process has multiple steps, so plan several months ahead of your purchase:

• Apply via myGov: Submit an FHSS release request through the ATO section of myGov. You must apply before signing a contract (or within 14 days of signing).
• ATO determination: The ATO issues a determination of your maximum releasable amount. This typically takes around 10 business days, though it can take up to 28 days.
• Release from super fund: Once the ATO instructs your fund to release the money, it flows through the ATO and then to your bank account. Allow 15 to 25 business days.
• Move in deadline: You must move into the property within 12 months of receiving the release, and live there for at least 6 months within the first 12 months.

In total, budget 6 to 10 weeks from application to money in your account. Do not count on having the funds available for an auction on the spot.

Key eligibility rules

• You must be 18 years or older to request a release.
• You must never have owned residential property in Australia before (including investment property).
• You can only request an FHSS release once in your lifetime.
• If your purchase falls through, you must either recontribute the funds to super or pay a penalty tax on the amount.
• The scheme applies to both new and established properties, unlike some state FHOG grants that only apply to new builds.

Is it worth the complexity?

For most first home buyers earning above $45,000, yes. The combination of lower contributions tax and the 30% withdrawal offset creates a genuine financial advantage that a standard savings account cannot match. A single person saving $15,000 per year over three years comes out roughly $11,500 ahead compared to saving from after-tax income, and a couple can double that.

The scheme suits buyers who have a reasonable savings timeline of at least one to two years, since the administrative steps and the release timeline make it impractical for purchases happening in the next few months. It also requires your employer to offer salary sacrifice arrangements, which most do.

Consider whether the FHSS applies to your situation if you are in the 30% or higher marginal rate bracket, have 1 to 4 years before you plan to buy, and your employer supports salary sacrifice. For those on lower incomes or buying very soon, simpler savings strategies may make more sense.

Model your own FHSS scenario

The numbers above are illustrative. Your exact benefit depends on your income, how many years you contribute, your super fund's handling of contributions, and the ATO's deemed earnings rate at the time of release.

Use the FHSS Calculator to run your specific numbers: input your salary, contribution amount, and timeline to see your estimated tax saving, total releasable amount, and withdrawal tax. If you want to see how your FHSS release fits into your overall borrowing capacity, the Borrowing Power Calculator will show how the extra deposit changes what you can borrow. And to stack the FHSS on top of state grants and federal schemes, Grant Stacker shows your total entitlements by state.