Salary sacrifice means giving up part of your before-tax pay in exchange for something else, often putting more money into your super or a car lease. With super, the money goes in taxed at 15% instead of at your marginal rate, so if you earn over $45,000 you keep more of it than if it landed in your pay and was taxed at your full rate.
On a $100,000 salary, sacrificing $10,000 into super saves about $1,700 in tax. It costs you $6,800 in take-home pay and puts $8,500 into your super, instead of $6,800 after tax in your pocket. It's worth noting that before-tax super contributions are capped at $32,500 a year in 2026-27, and your employer's compulsory super (12% typically) counts toward that total cap.
How salary sacrifice works
Your employer pays part of your salary somewhere other than your bank account, such as into your super, and because it comes out before tax, it isn't taxed at your marginal rate. Sacrificed super is instead taxed at a flat 15% as it enters the fund.
The gap between your marginal rate and the 15% contributions tax is the benefit. Someone in the lowest tax bracket, up to $45,000, barely gains anything, because their marginal rate is almost the same as the 15% super tax. Someone who's paying 32%, 39% or 47% gains the difference on every dollar they sacrifice. The higher your rate, the more each sacrificed dollar is worth.
It is a formal arrangement, set up with your employer before you earn the money, not something you claim back later at tax time. You agree to sacrifice a set amount, and your pay and super are adjusted from then on.
What it can save you
Here is an example on a $100,000 salary sacrificing $10,000 into super.
| Take it as salary | Sacrifice into super | |
|---|---|---|
| Amount | $10,000 | $10,000 |
| Tax | $3,200 (at 32%) | $1,500 (at 15%) |
| What you keep (from this $10k) | $6,800 in your pocket | $8,500 in super |
You are $1,700 better off, and it lands in super rather than your bank account. That last part is the trade-off: the money is locked away until you retire, unless you use it toward a scheme like the First Home Super Saver, which lets you withdraw it for a deposit.
The saving scales with your tax rate. At a 39% marginal rate the same $10,000 saves $2,400; at 47% it saves $3,200. That is why salary sacrifice tends to suit middle and higher income earners.
The concessional cap
Before-tax super contributions are capped at $32,500 a year for 2026-27, up from $30,000 in 2025-26. This is the concessional cap, and it covers everything that goes into super before tax.
An important note: your employer's compulsory Super Guarantee, now 12% of your salary, counts toward the same cap. So your real sacrifice room is $32,500 minus what your employer already puts in. On a $100,000 salary, the 12% Super Guarantee is $12,000, leaving about $20,500 of headroom to sacrifice into super.
Go over the cap and the excess is taxed at your marginal rate rather than 15%, which undoes the whole benefit. But if your total super balance is under $500,000, you can carry forward unused cap from the previous five years, which lets you make a larger sacrifice in a year you can afford it.
The forms of salary sacrifice
Super is the most common one, but salary sacrifice is a broader mechanism, and it can open a few different options. Each has its own maths, so each has its own calculator.
- Into your super. The most common. Cut your taxable income, build retirement savings, taxed at 15% going in. This is what the short version above covers. Model it in the salary sacrifice calculator.
- Into a car, through a novated lease. You sacrifice pre-tax salary to pay for a car and its running costs. For an eligible electric vehicle the fringe benefits tax exemption can make this much cheaper than buying with after-tax money. Work out the numbers in the novated lease calculator.
- Toward a first home, through the First Home Super Saver scheme. You salary sacrifice first into super, then withdraw those contributions plus deemed earnings for a first-home deposit, taxed lightly on the way out. It uses the concessional cap and the 15% rate to build a deposit faster than saving in a bank account. See what it builds in the FHSS calculator.
- Other packaging. Depending on your employer, laptops, some work expenses and, for eligible not-for-profit and health workers, a broader range of benefits can be packaged before tax. Estimate it in the salary packaging calculator.
Our take
Beyond the obvious high-earner case (using super as a lower-tax, longer-term investment vehicle), we find salary sacrifice is especially useful in two scenarios.
Getting an EV novated lease. You can save a lot on a car by cutting down your tax bill, and for an eligible electric vehicle the FBT exemption makes it even sharper. Work out the numbers in the novated lease calculator.
The First Home Super Saver scheme. If you're saving for a home and planning to buy your first place, you sacrifice up to $15k a year into your super at a lower tax rate, then withdraw it later for your deposit. It's a no-brainer if you were saving that money anyway. See how the First Home Super Saver scheme works.
When salary sacrifice stops making sense
It is not free money, and it is wrong for some people.
- Your marginal rate is 16% or lower. Income up to $45,000 in 2026-27 sits in the tax-free threshold or the lowest bracket, where your rate barely beats the 15% super tax, so there is almost nothing to gain.
- You will need the money soon. Sacrificed super is locked until your preservation age, around 60. It cannot help with a goal before then, which is where after-tax savings or an offset account win.
- You would breach the cap. Sacrificing past the $32,500 concessional cap taxes the excess at your marginal rate and undoes the benefit.
- You earn over $250,000. Division 293 adds an extra 15% tax on concessional contributions for high earners, which halves the rate advantage, though sacrificing can still beat paying 47% on the same money. Check it in the Division 293 calculator.
One thing it does not do: cut your HECS
A common myth. Salary sacrificing into super does not reduce your compulsory HECS or HELP repayment.
Your repayment is worked out on your repayment income, and reportable super contributions, which include salary-sacrificed super, are added back for that calculation. So the sacrifice lowers your taxable income for income tax, but not the income your student loan repayment is based on. If cutting your HECS repayment is the goal, salary sacrifice is not the way to go. See how HECS repayments actually work.
Model your own situation
The saving turns on your salary, how much you sacrifice, and your cap headroom after the Super Guarantee. Put your own numbers in.
Work out your salary sacrifice in Orbit's calculator →
It shows the tax you save, what lands in super, what it costs your take-home pay, and flags you if you are heading past the concessional cap.
Frequently asked questions
How much can I salary sacrifice into super?
Up to the $32,500 concessional cap for 2026-27, minus your employer's 12% Super Guarantee. On a $100,000 salary that is roughly $20,500 of room. Carry-forward may let you contribute more if your total super balance is under $500,000.
How much tax does salary sacrifice save?
The gap between your marginal rate and the 15% contributions tax, on every dollar you sacrifice. On $10,000 at a 32% marginal rate, that is about $1,700. At 47%, about $3,200.
Does salary sacrifice reduce my HECS repayment?
No. Salary-sacrificed super is added back to your repayment income, so your compulsory HECS or HELP repayment is unchanged. It cuts your income tax, not your student loan repayment.
Is salary sacrifice worth it?
For most middle and higher earners, yes, because the 15% contributions tax beats their marginal rate. It is not worth it if you earn under $45,000, will need the money before your preservation age, or would push past the concessional cap.
What can I salary sacrifice apart from super?
A car through a novated lease, a first-home deposit through the First Home Super Saver scheme, and, depending on your employer, some work expenses and packaged benefits. Each has its own rules and its own calculator.
General information only, current as of 30 July 2026 for the 2026-27 year. It is not personal tax advice. Verify current caps and thresholds at ato.gov.au or with a registered tax agent.
