Salary Sacrifice Super 2026: Boost Your Retirement With Pre-Tax Dollars

Superannuation · 23 July 2026 · Use the super growth calculator →

Salary sacrifice to super is one of the simplest and most tax-effective ways to build retirement savings in Australia. By redirecting a portion of your pre-tax salary directly into your super fund, you pay 15% contributions tax instead of your marginal tax rate — which for most workers is at least 30%. Here’s how it works, what it saves you, and how to set it up.

How salary sacrifice to super works

Normally, your employer pays you a gross salary, deducts PAYG tax at your marginal rate (plus Medicare levy), and the remainder hits your bank account. With salary sacrifice, you direct some of that gross pay into super before tax is calculated. The sacrificed amount is taxed at 15% in the super fund — the concessional contributions tax rate — rather than your marginal rate.

Let’s work through the numbers. Alex earns $100,000 per year and is in the 30% marginal tax bracket (plus 2% Medicare levy, effective rate 32%). She decides to salary sacrifice $10,000 to super.

Without sacrifice: $10,000 × 32% = $3,200 in tax and Medicare, leaving $6,800 in take-home pay.

With sacrifice: $10,000 goes to super, taxed at 15% ($1,500), leaving $8,500 in her super account. Her take-home pay drops by $6,800, but her super grows by $8,500 — an effective gain of $1,700 from the same gross pay.

The tax saving = (marginal rate + Medicare levy - 15%) × sacrificed amount. At the 30% bracket, you save 17% of the sacrificed amount. At 37%, you save 24%. At 45%, you save 32%. The higher your income, the larger the tax advantage.

The interaction with employer SG contributions

The super guarantee (SG) — the 12% your employer must contribute — also counts toward your $30,000 concessional cap. If your employer contributes $12,000 in SG on a $100,000 salary, you have $18,000 in remaining cap space for salary sacrifice. This is important: you need to calculate the gap between your employer’s SG and the $30,000 cap to avoid exceeding it.

On a $150,000 salary, SG is $18,000, leaving $12,000 for salary sacrifice. On a $60,000 salary, SG is $7,200, leaving $22,800 — and someone earning $60,000 is in the 30% marginal bracket in 2026–27, so the tax difference can be meaningful. Personal circumstances, Division 293 tax and contribution caps still matter.

The carry-forward rule

Since 1 July 2019, unused concessional cap amounts from up to five prior financial years can be carried forward and used in a later year — provided your total super balance was below $500,000 on 30 June of the previous financial year. This is powerful for people with irregular income, those returning to work after time off, or anyone who hasn’t maximised their cap in recent years.

If you’ve been working for five years with an employer contributing SG but you never salary sacrificed, you could have accumulated $30,000+ in unused cap space, allowing a substantial catch-up contribution in a single year. The ATO tracks unused cap amounts on your myGov account, and the carry-forward is applied automatically — oldest unused amounts are used first.

Division 293 tax: the high-income catch

If your combined income and concessional super contributions exceed $250,000 in a financial year, you pay Division 293 tax — an additional 15% on the lesser of your concessional contributions or the amount over $250,000. This effectively doubles the tax on your concessional contributions (from 15% to 30%) for the portion above the threshold.

For someone earning $260,000 with $31,200 in SG (12%), the calculation is: income ($260,000) + concessional contributions ($31,200) = $291,200. The amount over $250,000 is $41,200. Division 293 tax = 15% × $31,200 (capped at the concessional contribution amount, which is lower) = $4,680. The ATO issues a separate assessment for this — it’s not deducted by the fund.

Even with Division 293 tax, salary sacrifice still beats taking the money as salary at the 45% marginal rate (47% including Medicare levy). The total tax on salary sacrifice for a Division 293 payer is 30% (15% + 15%) vs 47% on salary — still a 17 percentage point advantage.

Setting it up with your employer

Salary sacrifice to super is a voluntary arrangement between you and your employer. The employer has no obligation to offer it, but most do — it costs them nothing and has minimal administrative overhead. To set it up:

Contact payroll or HR and ask for a salary sacrifice to super form. Specify the amount per pay period (e.g., $200 per fortnight) or a percentage of your gross pay. The amount is deducted from your pre-tax salary, meaning your take-home pay will drop by less than the sacrificed amount because your PAYG withholding adjusts downward.

The arrangement applies prospectively — you can’t sacrifice salary you’ve already earned. You can typically adjust the amount or stop the arrangement at any time, though some employers limit changes to quarterly. The sacrificed amount appears on your payslip as a separate line item and is reported on your income statement at year-end as “reportable employer super contributions.”

Importantly, your employer’s SG obligation is calculated on your original (pre-sacrifice) salary, not the reduced amount. Sacrificing $10,000 on a $100,000 salary doesn’t reduce your employer’s SG contribution — they still pay $12,000.

The effective salary sacrifice calculator

To decide how much to salary sacrifice, work backward from your financial goals. If you want to add $10,000 to your super this year via salary sacrifice, the cost to your take-home pay depends on your tax bracket:

The numbers make it clear: salary sacrifice is most powerful for higher-income earners, but it’s still beneficial for anyone in the 30% bracket or above.

Use the Super Growth calculator to model how salary sacrifice contributions compound over time and what your final retirement balance could look like. For more on contribution rules, see our guide on super contribution caps and for setting retirement targets, check how much super you need to retire.

Disclaimer: This article provides general estimates only and does not constitute financial, tax, or legal advice. Contribution caps, tax rates, and eligibility rules change. Always refer to the ATO website or consult a licensed financial adviser for advice specific to your circumstances. Last updated: July 2026.

Frequently asked questions

How much can I salary sacrifice to super each year?
The concessional contributions cap for 2026-27 is $30,000. This cap covers all pre-tax contributions to your super, including the mandatory super guarantee (SG) your employer already pays (12% of your salary) plus any additional salary sacrifice amounts you direct. On a $100,000 salary, your employer already contributes $12,000 in SG, leaving $18,000 in remaining concessional cap space for salary sacrifice. If your total super balance was below $500,000 on 30 June of the previous financial year, you can also use unused concessional cap amounts from up to five prior years (carry-forward rule). This means someone with accumulated unused cap space could potentially contribute significantly more than $30,000 in a single year without exceeding the cap. Exceeding the cap triggers additional tax — the excess is added to your assessable income and taxed at your marginal rate plus an excess concessional contributions charge.
Is salary sacrifice to super better than making after-tax contributions?
For most people in the 30% marginal tax bracket or higher, salary sacrifice is more tax-effective because the contribution is taxed at 15% in the fund rather than your marginal rate (30%, 37%, or 45%). On a $10,000 salary sacrifice by someone in the 30% bracket: the contribution arrives in super as $8,500 (after 15% contributions tax), whereas taking that same $10,000 as salary would leave $7,000 after income tax and Medicare levy — then contributing it after-tax would add the full $7,000 to super. The salary sacrifice route puts $8,500 in super vs $7,000 from the after-tax path — a $1,500 advantage. However, if you're a low-income earner eligible for the government co-contribution (up to $500), making after-tax contributions to receive the matching government payment can be more beneficial than salary sacrifice. The comparison depends on your marginal rate: the higher your tax bracket, the more salary sacrifice wins.
How do I set up salary sacrifice to super with my employer?
Contact your payroll or HR department and request a salary sacrifice arrangement. Most employers have a standard form or process. You'll specify a dollar amount per pay period or a percentage of salary to redirect to super. The employer deducts this amount before calculating PAYG withholding, so your take-home pay drops by less than the sacrificed amount (because you pay less tax). The arrangement must be prospective — you can't salary sacrifice for income already earned. You can adjust or stop the arrangement at any time, though employers may limit changes to once per quarter or require notice. The sacrificed amount appears on your payslip and is reported on your payment summary. Note that your employer's SG obligation (12%) is calculated on your pre-sacrifice salary — the salary sacrifice arrangement doesn't reduce the SG they must pay.
Does salary sacrifice to super reduce my HECS repayments or child support?
No. Salary sacrifice contributions are classified as reportable employer super contributions, and they're added back to your income for calculating: HECS-HELP compulsory repayment income, Medicare levy surcharge income, child support, and certain Centrelink benefits. This means salary sacrificing $10,000 to super doesn't reduce your HECS repayment obligation or lower your child support assessment — those calculations use an income figure that includes the sacrificed amount. However, for income tax purposes (the tax you actually pay each year), the sacrificed amount is excluded — you're taxed on the reduced salary. This dual treatment (excluded for tax, included for HECS/MLS/child support) means salary sacrifice is still beneficial for pure tax savings, but it won't help you duck other obligations tied to your income level.

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Disclaimer: This article provides general information only and does not constitute financial, tax, or legal advice. Figures and thresholds referenced are 2026 estimates and may vary by individual circumstances. Always verify details with a licensed financial adviser, tax professional, or your state revenue office before making a purchase or investment decision.