In short: Salary sacrificing into super means asking your employer to pay part of your pre-tax salary into super, where it is generally taxed at 15% instead of your marginal rate. In 2026–27 every concessional contribution, including your employer’s 12%, counts towards a $32,500 cap. It suits people on a 30% marginal rate or higher who can live without that money for now.

What does salary sacrifice mean?

Salary sacrificing is essentially a savings strategy designed to minimise your tax bill. It involves an arrangement with your employer to receive less of your taxable income in return for benefits of similar value.

These benefits can include the purchasing of a car, phone or other goods or services that you may be paying for anyway.

Salary sacrificing into your super is a common form of this strategy which involves voluntarily contributing a portion of your pre-tax income into your superannuation, over and above the 12 per cent super guarantee your employer must pay.

This strategy reduces your pre-tax income and therefore reduces the amount of tax you pay at tax time.

How does salary sacrificing into your super work?

Salary sacrificing starts with an employee formally asking their employer to redirect part of their before-tax income directly into their super.

By foregoing a portion of your income in the short-term, salary sacrificing will allow you to build a substantial nest egg in your super fund, whilst paying less tax on the money you make.

This is because these contributions are generally taxed at 15 per cent inside your fund. They count towards your concessional contributions cap, which is $32,500 for 2026–27, and your employer’s super counts towards it too. If your income is over $250,000, an extra 15 per cent (Division 293 tax) can apply.

To see how this works, say you earn $100,000 a year before tax and your employer pays 12% super on top.

Using the 2026–27 resident tax rates plus the 2% Medicare levy, you would pay about $22,520 and take home around $77,480.

Now say you salary sacrifice $10,000. Your taxable income drops to $90,000, your tax and Medicare levy drop to about $19,320, and you take home around $70,680. The $10,000 goes into super and, after the 15% contributions tax, $8,500 stays in your account.

Your take-home pay falls by $6,800, but your super grows by $8,500. That is roughly $1,700 a year that stays with you rather than going to tax. Your employer’s 12% is still worked out on your full salary, so it doesn’t shrink.

If you are looking to make your own calculations on how much salary sacrificing could save you on income tax, you can use our income tax calculator here.

Can I make personal contributions to my super from my after-tax income?

In short, yes you can.

Anyone can add money to super from their after-tax pay. These are called non-concessional contributions. Most people can also claim a tax deduction for a personal contribution (a work test applies from age 67), which gives a similar result to salary sacrificing.

Non-concessional contributions are when an employee chooses to add to their super using their after tax income, without needing to involve their employer.

If you don’t claim a deduction, the money isn’t taxed again when it goes in. It counts towards a separate non-concessional cap of $130,000 for 2026–27. If you do claim a deduction, the contribution is taxed at 15% in the fund, just like salary sacrifice.

To do this, you will need to lodge a notice of intent form with your super fund when making your contribution, which they will acknowledge in writing.

You must then have this paperwork ready when preparing and lodging your tax return to confirm your super fund is aware of your intention to claim these contributions as tax deductible.

Once you claim them, those contributions count towards the same $32,500 concessional cap as your employer’s super and any salary sacrifice. Go over the cap and the excess is added to your taxable income and taxed at your marginal rate (less a 15% offset), so add everything up before June.

Is salary sacrificing a worthwhile strategy?

Whether or not salary sacrificing is a worthwhile strategy for you will depend on your objectives.

Obviously, allocating an additional portion of your income for your super means you forgo having that money in the short-term.

The decision should come down to your level of disposable income and whether you can afford to reduce it in favour of a long-term strategy.

Because of this, salary sacrificing is generally most effective for middle to high-income earners who pay higher rates of tax and have greater flexibility with their week-to-week earnings.

In general, growing your super can be a great long term investment because it removes the temptation to spend that money along the journey.

When formulating an investment plan to set you up for the years and decades to come, it’s important to weigh up the costs and benefits of your chosen strategy.

If part of your strategy involves growing a substantial superannuation to last you through retirement, then it is crucial that you take your time deciding which super fund is right for you.

A higher risk/reward approach might be more suitable for younger workers, while those closer to retirement age may opt for safer returns to ensure the health of their super.

If your strategy involves investing your disposable income, salary sacrificing can limit your capacity to do so in the short-term.

Keep in mind, however, that any income made from these investments will generally be taxed at your ordinary income tax rate. Earnings inside super, by contrast, are generally taxed at no more than 15 per cent while you are building your balance.

If one of your objectives is to buy your first home, then consider utilising the First Home Super Saver scheme to build a deposit.

First Home Super Saver scheme

The First Home Super Saver (FHSS) scheme is an initiative designed to reduce pressure on housing affordability.

It enables you to save up for your first home inside your super fund, whilst utilising the concessional tax benefits of superannuation.

Under the scheme, you can have up to $15,000 of voluntary contributions from any one year, and $50,000 in total, released (plus associated earnings) to put towards a deposit on your first home.

These contributions include any made by salary sacrificing, or any voluntary non-concessional contributions that you make after tax.

You can’t withdraw the super guarantee your employer has paid, only the voluntary contributions you have made on top.

Eligibility for the scheme is determined by the following factors:

• The home you purchase must be located in Australia

• You must not have previously owned a property

• You must be at least 18 years of age, although you can make eligible contributions before this age

• You must not have previously made a FHSS release request

• You must occupy the premises you buy, or intend to as soon is practicable

• You must intend to occupy the property for at least six months within the first 12 months that you own it, after it is practical to move in

There’s no single formula here. The right amount depends on your income, what the next few years look like for you and your family, and how much breathing room your budget has. It is also worth revisiting every year as your pay and plans change. If you want to work through the numbers, talk to Oz and our tax planning team.

Frequently asked questions

How much can I salary sacrifice into super in 2026–27?

Up to the $32,500 concessional cap, less your employer’s super guarantee. If your total super balance was under $500,000 on 30 June last year, you may also be able to use unused cap amounts from the previous five years.

Does salary sacrificing reduce my employer’s super?

No. Your employer must work out the 12% super guarantee as if you had not salary sacrificed.

How is salary sacrifice taxed?

Generally at 15% inside your fund. If your income plus concessional contributions is over $250,000, an extra 15% Division 293 tax can apply.

Last updated: 4 November 2026.

General information only, based on the rules at the date above. It does not take into account your circumstances, so speak to your accountant before acting.