Contributions tax
15%
Concessional cap
$30,000
Division 293 threshold
$250,000
SG rate
12%
How salary sacrifice into super works
Salary sacrifice is an arrangement where you and your employer agree to redirect a portion of your pre-tax salary directly into your super fund. Instead of receiving that money as take-home pay (taxed at your marginal rate), it goes into super where it's taxed at just 15%.
For example, on a $120,000 salary, if you salary sacrifice $10,000:
| Without sacrifice | With sacrifice | |
|---|---|---|
| Gross salary | $120,000 | $120,000 |
| Salary sacrifice | $0 | $10,000 |
| Taxable income | $120,000 | $110,000 |
| Tax on sacrificed amount | $3,450 (34.5%) | $1,500 (15%) |
| Tax saving | — | $1,950 |
Tax benefits by income bracket
The tax benefit of salary sacrifice depends on your marginal tax rate. The higher your tax bracket, the more you save per dollar sacrificed into super:
| Income range | Marginal rate | Saving per $1 |
|---|---|---|
| $18,201 – $45,000 | 19% | 4c |
| $45,001 – $135,000 | 30% | 15c |
| $135,001 – $190,000 | 37% | 22c |
| $190,001+ | 45% | 30c |
Savings shown exclude Medicare levy. Rates include Medicare levy of 2%.
Division 293 for high earners
Impact on HECS/HELP repayments
A common misconception is that salary sacrifice reduces your HELP repayment obligation. It does not. The ATO calculates your HELP repayment income (HRI) by adding reportable employer super contributions back to your taxable income.
Salary sacrifice does not reduce HELP repayments
Similarly, salary sacrifice does not reduce your income for Medicare Levy Surcharge (MLS) purposes. Reportable super contributions are added back when assessing MLS liability.
Contribution caps and salary sacrifice
Salary sacrifice contributions count toward your concessional contributions cap. For 2025–26, the concessional cap is $30,000 per year. This cap includes:
- Employer SG contributions (12%)
- Salary sacrifice contributions
- Personal contributions you claim as a tax deduction
On a $120,000 salary, your employer SG is $14,400 (12%). This leaves $15,600 of cap space available for salary sacrifice before exceeding the $30,000 limit.
Unused cap carry-forward
Salary sacrifice calculator
Compare your take-home pay, tax saved, and super boost with and without salary sacrifice:
Who should salary sacrifice into super?
Salary sacrifice is most beneficial if you:
- Are in a higher tax bracket (30% or above)
- Have room under your $30,000 concessional cap
- Don't need the money for immediate expenses
- Want to boost your retirement savings tax-efficiently
- Are not close to the Division 293 threshold ($250,000) without being aware of it
It may be less beneficial if you earn under $45,000 (where your marginal rate is close to 15%), or if you need the cash flow for short-term goals like saving for a home deposit.
Frequently Asked Questions
Related Guides
Super Contribution Caps 2025–26
Concessional and non-concessional caps, bring-forward rule, and what happens if you exceed them.
Carry-Forward Super Contributions
How to use unused concessional cap space from the last 5 years to catch up on super.
Bring-Forward Super Contributions
The 3-year bring-forward rule for non-concessional contributions, TSB thresholds, and examples.
Super Guarantee Rate 2025–26
Complete history of the SG rate, current employer obligations, and what it means for your super.