Salary Sacrifice into Super: How Much Tax You'll Save (Complete Guide 2026)
Salary sacrificing into super can save thousands in tax each year. Learn how it works, the $30,000 concessional cap, carry-forward rules, Division 293 tax, and see worked examples at $80K, $120K, and $150K salaries with exact tax savings calculations.
How does salary sacrifice into super work?
Salary sacrifice into superannuation is an arrangement where you agree with your employer to redirect part of your pre-tax salary directly into your super fund instead of receiving it as take-home pay. The redirected amount is taxed at only 15% inside the super fund (called contributions tax), compared to your marginal tax rate of 30%, 37%, or 45% plus the 2% Medicare levy. This difference between your marginal rate and the 15% super rate is where the tax saving comes from. For example, if you are on a 30% marginal rate and sacrifice $10,000 into super, you pay $1,500 in contributions tax (15%) instead of $3,000 in income tax (30%) — a net saving of $1,500. The trade-off is that money inside super is preserved until you reach preservation age (currently 60 for most people) and meet a condition of release, so you cannot access it in the short term. Salary sacrifice is a pre-tax arrangement, meaning it reduces your taxable income. Your employer pays the sacrificed amount to your super fund along with their regular superannuation guarantee (SG) contributions. The sacrifice must be arranged in advance — you cannot retrospectively sacrifice income already earned. Most employers facilitate salary sacrifice through their payroll system with a simple form or online request.
The concessional contribution cap: $30,000 in 2025-26
All concessional (pre-tax) super contributions count toward an annual cap, which is $30,000 per person for 2025-26. Concessional contributions include your employer's SG contributions (12% of your ordinary time earnings), any salary sacrifice amounts, and any personal contributions you claim as a tax deduction. You must ensure the total of all these does not exceed $30,000. Exceeding the cap means the excess is added to your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge. For a worker earning $100,000, their employer contributes $12,000 in SG (12% of $100,000). This leaves $18,000 of cap space for salary sacrifice. At $120,000, employer SG is $14,400, leaving $15,600. At $150,000, employer SG is $18,000, leaving $12,000. At $200,000, employer SG is $24,000, leaving only $6,000. Higher earners have less room for salary sacrifice because their employer contributions consume more of the cap. It is critical to track your contributions throughout the year and check with your super fund regularly. If you change jobs mid-year and have two employers contributing SG, the combined total can exceed the cap if you are also salary sacrificing. Your super fund reports contributions to the ATO, and any excess is identified after you lodge your tax return.
Carry-forward unused cap: boost your contributions
Since 1 July 2018, you can carry forward unused concessional cap amounts from the previous five financial years, provided your total superannuation balance was less than $500,000 as at the prior 30 June. This is a powerful feature that allows you to make larger one-off contributions in a year where you have the capacity to do so. For example, if in 2023-24 your total concessional contributions (employer SG plus any sacrifice) were $15,000 against a cap of $27,500, you had $12,500 of unused cap. If 2024-25 contributions were $14,400 against a cap of $30,000, you had $15,600 unused. These unused amounts accumulate and can be used in future years. In 2025-26, your available cap could be $30,000 plus the unused amounts from the previous five years. If you had a total of $40,000 in unused caps carried forward, you could contribute up to $70,000 in concessional contributions in a single year. This is particularly useful after receiving a bonus, inheritance, or windfall — you can direct a large lump sum into super at the favourable 15% rate. It is also valuable for people returning to the workforce after a career break. Check your available carry-forward amount on your myGov ATO account under the superannuation section.
Worked examples: $80K, $120K, and $150K salaries
Here are three practical scenarios showing exact tax savings. Scenario 1 — $80,000 salary: Employer SG is $9,600. You sacrifice $10,000. Total concessional contributions: $19,600 (under the $30,000 cap). Your taxable income drops from $80,000 to $70,000. At a 30% marginal rate, you save $3,000 in income tax but pay $1,500 in super contributions tax (15% on $10,000) — net tax saving of $1,500. Your take-home pay reduces by $8,500 (the $10,000 less the $1,500 tax saving). Scenario 2 — $120,000 salary: Employer SG is $14,400. You sacrifice $15,000. Total: $29,400. Taxable income drops to $105,000. Tax saving at 30% marginal: $4,500 less $2,250 contributions tax equals $2,250 net saving. Scenario 3 — $150,000 salary: Employer SG is $18,000. You sacrifice $12,000 (to stay under the $30,000 cap). Taxable income drops from $150,000 to $138,000, moving $12,000 from the 37% bracket. Tax saving: $4,440 (37% of $12,000) less $1,800 contributions tax (15%) equals $2,640 net saving. At higher marginal rates, the savings per dollar sacrificed are even greater.
Division 293 tax: the high-income super surcharge
Division 293 imposes an additional 15% tax on concessional super contributions for individuals whose income plus concessional contributions exceeds $250,000. This effectively doubles the super contributions tax from 15% to 30% on the amount over the threshold. For most salary sacrifice arrangements at typical income levels, Division 293 does not apply. However, high-income earners need to be aware of it. For example, if your salary is $230,000 and you salary sacrifice $25,000, your Division 293 income is $230,000 plus $25,000 equals $255,000. The amount over the $250,000 threshold is $5,000, so Division 293 tax is 15% of $5,000 equals $750. Even with Division 293, salary sacrifice is still tax-effective at high incomes because the combined 30% super tax rate is lower than the 45% plus 2% Medicare levy (47% total) marginal rate that applies above $190,000. On $25,000 sacrificed, you pay $3,750 in super taxes (15% on $20,000 plus 30% on $5,000) instead of $11,750 in income tax and Medicare (47% of $25,000) — still a net saving of $8,000. Division 293 is assessed by the ATO after you lodge your tax return and can be paid from your super fund or personally. It does not affect your concessional cap.
Interaction with employer super and salary packaging
A common question is whether salary sacrifice reduces the employer's SG obligation. The answer depends on your employment contract. Under the law, the SG must be calculated on your ordinary time earnings (OTE), and the ATO's position is that OTE includes your pre-sacrifice salary if the sacrifice arrangement merely redirects existing salary. Most modern employment contracts specify that SG is calculated on the pre-sacrifice salary, meaning your employer pays the same SG regardless of how much you sacrifice. However, some contracts (particularly older ones) may calculate SG on the post-sacrifice amount, which would reduce your employer's contribution. Always check your contract and confirm with payroll before setting up a salary sacrifice arrangement. Salary sacrifice can be combined with other packaging options. For example, you might salary sacrifice $10,000 into super, package a novated car lease, and also salary sacrifice into a portable electronic device — each has different FBT and tax treatment. The super sacrifice is the simplest and most universally available option, as it does not require FBT-exempt status. Some employers limit the types or amounts of salary sacrifice available. Government employees often have access to additional packaging options through salary packaging providers.
Setting up salary sacrifice: practical steps
To start salary sacrificing into super, follow these steps. First, calculate your available cap space: $30,000 minus your expected employer SG for the year, minus any other concessional contributions. Check your carry-forward balance on myGov if you want to contribute more than the standard cap. Second, speak to your employer's payroll or HR department. Most employers have a salary sacrifice form or online portal. You will need to specify the amount per pay period (for example, $500 per fortnight) and confirm your super fund details. Third, the arrangement must be prospective — it applies to future salary, not income already earned. Most employers allow you to start or change your sacrifice amount at any time, but some require notice periods or only process changes at the start of a pay period. Fourth, monitor your contributions throughout the year via your super fund's app or website. Contributions can take several weeks to appear after each pay cycle. Fifth, review your arrangement annually. Changes in salary, employer SG rates, or the concessional cap may require adjustments. If you receive a pay rise, you may want to direct some or all of the increase into salary sacrifice to maximise the tax benefit while keeping your take-home pay stable. Finally, consider obtaining personal financial advice for larger sacrifice arrangements.
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General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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