The numbers changed on 1 July 2026. The concessional contributions cap rose to $32,500, employers now pay super guarantee every payday under Payday Super, and the lowest resident tax rate fell to 15c in the dollar. Each change affects how much you can put in and how much you save.
We use salary sacrifice to cut tax and boost your super for many of our clients across Newcastle and Lake Macquarie. We also tell some clients not to do it. Here’s how it works this financial year, how much room you have under the cap, and how to tell which group you’re in.
What is salary sacrifice into super?
A salary sacrifice arrangement is an agreement with your employer to receive less income before tax, with the difference paid into your superannuation fund. The ATO also calls this “salary packaging” or “total remuneration packaging“.
Salary sacrifice contributions are concessional contributions, the same category as your employer’s super guarantee contributions. The sacrificed amount isn’t considered assessable income for tax purposes, so no PAYG tax is withheld on it. It’s taxed once, at 15%, when your super fund receives it.
The sacrificed salary still appears in your tax return as a reportable super contribution. That detail matters for income tests, which we cover under the downsides below.
Salary sacrifice vs salary packaging and fringe benefits tax
You can salary sacrifice for things other than super. Common benefits packaged this way include cars, goods, shares and personal expenses such as loan repayments, school fees and childcare costs. These are fringe benefits, and your employer will have to pay fringe benefits tax on the taxable value of each one. That’s why many employers limit what they offer, and why some ask you to make employee contributions from your after-tax pay to reduce the FBT they owe.
Super is treated differently. Salary sacrifice super contributions paid to a complying super fund are not a fringe benefit and don’t attract FBT. Your employer can also claim a tax deduction for them, as it would for any other employer contribution.
Work-related items are about to change. Portable electronic devices, software, protective clothing, briefcases, and tools of trade are currently exempt from FBT. From 1 April 2027, those items provided through a salary sacrifice arrangement will no longer be exempt and will be subject to FBT. If your package includes a laptop or phone, expect your employer to review it before you receive it.
The current salary sacrifice figures
These are the figures that decide how much you can salary sacrifice into super this financial year:
- The concessional contributions cap is $32,500 from 1 July 2026, up from $30,000 in 2024-25 and 2025-26. It’s indexed to average weekly ordinary time earnings in $2,500 steps.
- The super guarantee rate is 12% of qualifying earnings.
- Concessional contributions are taxed at 15% in your fund.
- Division 293 tax adds a further 15% once your income and concessional contributions pass $250,000.
- You can carry forward unused cap amounts if your total super balance was under $500,000 at 30 June 2026.
- The maximum super contribution base is $270,830 for 2026-27. Once your qualifying earnings reach it, your employer can stop paying SG for the rest of the year.
The 2026-27 resident rates for personal income tax, which exclude the 2% Medicare levy, are:
- $0 to $18,200: nil
- $18,201 to $45,000: 15c for each $1 over $18,200
- $45,001 to $135,000: $4,020 plus 30c for each $1 over $45,000
- $135,001 to $190,000: $31,020 plus 37c for each $1 over $135,000
- $190,001 and over: $51,370 plus 45c for each $1 over $190,000
How salary sacrifice reduces your taxable income
The amount you sacrifice is deducted from your pre-tax income before income tax and the Medicare levy are calculated. You pay tax on less income, and the sacrificed dollars are taxed at 15% in your fund instead.
Your employer contributions stay the same. Salary sacrifice doesn’t reduce the amount your employer calculates SG on, and it doesn’t count towards the super guarantee contributions your employer must make. Your full 12% is paid on top.
The tax advantages continue once the money is in super. Investment earnings inside a super fund are taxed at up to 15%, which is generally less than you would pay on the same earnings held in your own name. That makes super one of the most tax-effective places to build long-term savings, as long as you can wait to access it. If you’re weighing up other ways to reduce tax, our tax advice page covers the options we use with clients.
How much tax will I save if I salary sacrifice?
Your savings on each sacrificed dollar is your marginal tax rate plus the 2% Medicare levy, less the 15% contributions tax:
- In the 30c bracket ($45,001 to $135,000), you save 17c in every dollar.
- In the 37c bracket ($135,001 to $190,000), you save 24c in every dollar.
- In the 45c bracket (above $190,000), you save 32c in every dollar, or less if Division 293 applies.
These tax savings are why salary sacrifice benefits people on mid- to higher incomes the most.
Do you get a bigger tax return if you salary sacrifice?
Usually not. Less PAYG tax is withheld from the first pay the arrangement covers, so the savings are applied to every pay rather than as a larger refund. If you’d prefer the benefit at tax time, a personal deductible contribution, covered below, is the route that delivers it through your tax return.
How much can you salary sacrifice to super in 2026-27?
All your pre-tax contributions share a single cap. Your employer’s SG, your salary sacrifice contributions, and any personal contributions you claim a tax deduction for are added together across all funds you hold. For 2026-27, that total must stay within $32,500.
Your room to sacrifice is the part of the cap your SG doesn’t already use. Check the SG on your payslip, work out the full-year figure, and subtract it from $32,500. Unless your employment terms set a limit, there’s no other limit on how much you can salary sacrifice into super, but there are tax implications if you go over.
Leave yourself a margin, because three things regularly push people over the cap:
- A pay rise or bonus lifts your SG, which uses up the cap your salary sacrifice was planned around.
- A second job brings its own SG, and concessional contributions across all your funds are combined. If two employers’ SG alone would exceed the cap, you can apply to the ATO to opt out of SG from one employer.
- Insurance premiums or administration fees your employer pays to your fund also count towards the cap.
Contributions count in the year your super fund receives them. You can track what your funds have reported in ATO online services through myGov by selecting Super, Information, then Concessional contributions.
What happens if you salary sacrifice more than the cap?
The cap for 2026-27 is $32,500, not the $30,000 that applied until 30 June 2026. Excess concessional contributions are included in your assessable income and taxed at your marginal tax rate, less a 15% tax offset for the contributions tax your fund has already paid.
The ATO sends a determination letter, and you can elect to release up to 85% of the excess from your fund to pay the bill. Any excess you don’t release counts towards your non-concessional contributions cap, which is $130,000 for 2026-27.
Is salary sacrifice worth it? Who it suits and who it doesn’t
Salary sacrifice is usually worth it when three things line up: your taxable income is above $45,000, you have room under the cap after SG, and you won’t need the money before you can access your super.
Who salary sacrifice tends to suit
- Employees in the 30c bracket or higher, where each sacrificed dollar saves at least 17c.
- People who already hold a cash buffer for emergencies and known costs.
- Pre-retirees with a total super balance under $500,000 who can use carry-forward to catch up.
- Anyone with several years before retirement has time for the extra super to grow at a lower tax rate.
If that sounds like you, our superannuation service can set a salary sacrifice amount that fits your annual salary and cash flow.
Who it may not suit
In the $18,201 to $45,000 bracket, your marginal rate is 15c, the same as the contributions tax. The saving is at most the 2% Medicare levy, which rarely justifies locking the money away.
If your adjusted taxable income is $37,000 or less, the low income super tax offset already returns 15% of your concessional contributions to your fund, up to $500. Your fund needs your tax file number to accept it.
Salary sacrifice can also reduce the government co-contribution. The co-contribution adds up to $500 to the super of low- and middle-income earners who make personal after-tax contributions, and its income test uses your total income, including reportable employer super contributions. Salary sacrifice raises that figure.
Cash flow matters as well. Money in super is preserved until you meet a condition of release, usually retiring after your preservation age. If you’re saving for a home deposit or carrying high-interest debt, compare the options first.
Salary sacrifice or a personal deductible contribution?
Both are before-tax contributions. Both count towards the same $32,500 cap and are taxed at 15% in your fund. The differences are timing and paperwork.
With salary sacrifice, the arrangement sits with your employer and the tax saving shows up in every pay. There’s nothing to claim at tax time.
With a personal contribution, you pay after-tax money into your fund and then claim a tax deduction for it. Before you claim, you must give your fund a notice of intent in the approved form and receive its acknowledgment. The notice is due by the earlier of the day you lodge your tax return for that year and the last day of the following income year. If you roll over or withdraw from that fund before lodging the notice, you lose the deduction. If you’re 67 to 74, you also need to meet the work test (40 hours of paid work in 30 consecutive days) or its one-off exemption.
Personal after-tax contributions only become concessional once the deduction is claimed. Contributions you don’t claim count towards your non-concessional contributions cap instead.
A personal deductible contribution suits people whose employer doesn’t offer salary sacrifice, and those with irregular income who would rather make a lump-sum contribution near 30 June once they know their income for the year. Salary sacrifice suits people who prefer a set amount from each paycheque before tax, without the paperwork. For other contribution types and the end-of-year push, see other ways to boost your super before 30 June.
Salary sacrifice for couples: whose salary should you sacrifice?
The tax savings are greater for the partner with the higher marginal tax rate. A partner in the 37c bracket saves 24c per dollar sacrificed, compared with 17c in the 30c bracket.
Super balances matter too. If one partner has much less super, the higher earner can sacrifice and then split up to 85% of their concessional contributions into the other partner’s account after the end of the financial year. Split amounts still count towards the contributing partner’s cap. Carry-forward eligibility is tested for each person separately, so a partner with a balance under $500,000 may have far more cap room than the other.
Talk to us about your salary sacrifice arrangement
The right amount to sacrifice depends on your income, your SG, your cash flow and the income tests that apply to your family. One of our advisers can check how much cap room you have, confirm the timing of your contributions and give personal financial advice that puts your best interests first. Call our team on 1300 778 819 or book an initial consultation.
