Salary sacrifice means asking your employer to pay part of your pre-tax salary into super instead of to you. The appeal is a tax gap. Salary is taxed at your marginal rate, while money going into super is generally taxed at 15%. This guide shows how big that gap is at different incomes, and the rules and catches that come with it.
A worked example
Take someone earning $100,000 a year in 2026–27. Their marginal rate is 30%, plus the 2% Medicare levy, so 32% in total. They sacrifice $10,000 of salary into super.
| $10,000 of salary | Taken as pay | Sacrificed into super |
|---|---|---|
| Tax | $3,200 (32%) | $1,500 (15%) |
| What's left | $6,800 in your pocket | $8,500 in super |
That is $1,700 more working for them, every $10,000 they sacrifice. The trade-off is plain too. Their take-home pay drops by $6,800 a year, and the money is locked in super.
How the gap changes with income
For each $10,000 sacrificed in 2026–27, including the 2% Medicare levy:
| Taxable income | Marginal rate | Tax gap per $10,000 |
|---|---|---|
| $18,201 to $45,000 | 17% | $200 |
| $45,001 to $135,000 | 32% | $1,700 |
| $135,001 to $190,000 | 39% | $2,400 |
| Over $190,000 | 47% | $3,200 (less if Division 293 applies) |
On lower incomes the gap is small. People on low incomes may also get some or all of their contributions tax refunded through the ATO's low income super tax offset, so check those rules before assuming any saving.
The rules that matter
- The cap. The concessional contributions cap is $32,500 from 1 July 2026 (it was $30,000 in 2025–26). It includes your employer's compulsory super, which is 12% of ordinary earnings. On a $100,000 salary that is $12,000, leaving about $20,500 of room.
- Carry-forward. If your total super balance was under $500,000 on 30 June of the previous year, you can use unused cap amounts from up to five earlier years.
- Going over the cap. Excess concessional contributions are added to your taxable income and taxed at your marginal rate, with a credit for the 15% already paid.
- Division 293. If your income plus concessional contributions is over $250,000, an extra 15% tax applies to some or all of those contributions.
- Set it up in advance. A salary sacrifice arrangement has to be agreed with your employer before the income is earned. You can't sacrifice pay you have already received. Your employer also can't reduce your compulsory super because you sacrifice.
- Access. Super is generally preserved until you reach your preservation age (60 for anyone born after 30 June 1964) and meet a condition of release, such as retiring.
A related option
If your employer doesn't offer salary sacrifice, or your income is irregular, you can make a personal contribution and claim a tax deduction for it. It counts towards the same cap. To claim it, you lodge a notice of intent with your super fund and get an acknowledgement before you lodge your tax return.
Salary sacrifice also competes with other uses for the same money, such as a home loan. See pay off the mortgage or invest.
Run your own numbers
Every household is different. MyFinancialFuture lets you model salary sacrifice over your working life with your own income, loan and super, month by month, for free and without an account.
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