(Bloomberg) -- Australia’s government has rolled back some of the most contentious elements of a planned tax on large pension balances after its initial plan drew heavy criticism.

The government had planned to slap an extra 15% levy on profits from pension balances above A$3 million ($2 million). That’s on top of the 15% tax that they — and most Australian workers — already typically pay on investment earnings in their superannuation accounts.

Most Read from Bloomberg

Newsom Stares Down LA Revolt in New California Housing Fight

HUD Issues Layoff Notices, Targeting Fair Housing Staff With Deep Cuts

Billionaire Caruso Says He No Longer Builds in LA Due to Prices

Mapping a Way Out of the US Housing Affordability Crisis

The Secret to Vancouver’s Public Transit Ridership Recovery

The government’s initial plan was slammed by opposition parties and some financial executives, mainly because tax thresholds weren’t indexed to inflation and the levy would capture changes in assets’ value regardless of whether they’re sold within the financial year.

The changes mean the tax will no longer be applied to unrealized gains, while key thresholds will now increase in line with inflation, according to a statement from Treasurer Jim Chalmers on Monday. Meanwhile, pension balances above A$10 million will now face a 40% levy. The proposed changes will apply from July next year.

Wealthy Australians Brace for a New Tax on Retirement Savings

About 90,000 Australians will have more than A$3 million in their pension next year, and about 8,000 will have balances above A$10 million, Chalmers said on Monday.

“We have found another way to deliver on the same objectives,” said Chalmers. “This means a better deal for low-income workers and also better targeted concessions for the biggest balances.”

Labor first unveiled the pension tax proposal in 2023, promising it wouldn’t become law until after the 2025 election. But after struggling to win enough Senate support, it was shelved. The government is betting that the changes announced Monday will make opposition lawmakers more amenable to passing the reform.

The government will introduce legislation for the changes “as soon as possible in 2026,” according to the statement.

Most Read from Bloomberg Businessweek

‘I Believe It’s a Bubble’: What Some Smart People Are Saying About AI

A Shipwreck Killed 41 Crew and 5,900 Cattle. The Brutal Business Behind It Goes On

How Din Tai Fung Became America’s Top-Earning Restaurant Chain

Did Wall Street Just Admit It’s a Casino After All?

Drilling Frenzy Arrives in Canada’s Pristine Wilderness

©2025 Bloomberg L.P.