How salary sacrificing to super works
Salary sacrifice moves pay from your wallet to your super fund before income tax is applied.
With a salary sacrifice arrangement, you agree with your employer to take less pay and have that money paid into your super as an employer contribution. Because it comes out of pay before tax, your taxable income falls. The fund then pays 15% tax on the contribution.
The two effects
| Effect | How it works |
|---|---|
| Less income tax now | You pay tax on a lower taxable income, saving your marginal rate plus the 2% Medicare levy |
| 15% tax in the fund | Concessional contributions are taxed at 15% when they arrive in the fund |
Worked example: $10,000 on a $100,000 salary, 2026-27
Income tax $20,520 plus Medicare $2,000 = $22,520.
On $90,000: income tax $17,520 plus Medicare $1,800 = $19,320.
You save $3,200 of tax, so take-home pay falls by $6,800, not $10,000.
After 15% contributions tax, $8,500 lands in super, which is $1,700 more than the pay you gave up.
The cap and other limits
Employer super and salary sacrifice both count towards the concessional contributions cap, which is $32,500 for 2026-27 (it was $30,000 for 2025-26). Going over can mean extra tax. Division 293 tax can apply to high incomes, super is locked away until you meet a condition of release, and carry-forward rules can let you use unused cap from earlier years if your balance is under a threshold. Check the ATO and your fund.
✨ Key Takeaways
- Sacrificing salary lowers taxable income, and the fund taxes the contribution at 15%.
- Take-home pay falls by less than the amount sacrificed.
- Employer super counts towards the same cap.
- Super is locked away, so think about when you need the money.
Open the salary sacrifice calculator →