Salary Sacrifice Calculator: How Much Will You Save?

How Does Salary Sacrifice Work?

Salary sacrifice redirects a portion of your pre-tax gross salary into superannuation, reducing your taxable income and the income tax you pay in FY2026-27.

The sacrificed amount is taxed at 15% inside your super fund as a concessional contribution, instead of your marginal tax rate of 30%, 37%, or 45%. The difference between those two rates is your tax saving. Use our Income Tax Calculator to confirm your marginal rate before setting up a salary sacrifice arrangement.

Step-by-Step: How Salary Sacrifice Is Calculated

1. Start with your gross annual salary (e.g., $100,000).
2. Choose a salary sacrifice amount (e.g., $10,000).
3. Your employer deducts $10,000 before PAYG withholding, reducing taxable income to $90,000.
4. Income tax is calculated on $90,000 instead of $100,000, saving you the difference in tax.
5. Your super fund receives the $10,000 as a concessional contribution and applies 15% contributions tax ($1,500).
6. Net result: $8,500 added to your super balance, with a take-home pay reduction smaller than $10,000 because of the tax saving.

Worked Example: $100,000 Salary With $10,000 Sacrifice

The sacrifice reduces take-home pay by less than $10,000 because income tax and the Medicare levy are worked out on the lower taxable income. Every dollar sacrificed from the 30% income tax bracket saves $0.17 in net tax (30% marginal rate plus the 2% Medicare levy, minus 15% super contributions tax).

What Are the Tax Benefits of Salary Sacrifice?

Salary sacrifice saves tax because concessional super contributions are taxed at 15%, which is lower than the 30%, 37% and 45% income tax rates in FY2026-27.

The tax benefit increases with your marginal tax rate. An employee earning $80,000 in the 30% bracket saves 15 cents per dollar sacrificed. An employee earning $150,000 in the 37% bracket saves 22 cents per dollar. High-income earners above $190,000 in the 45% bracket save 30 cents per dollar while their income plus concessional contributions stays at or below the $250,000 Division 293 threshold. These savings are before the 2% Medicare levy, which adds 2 cents per dollar. Use our Take-Home Pay Calculator to see your after-tax income with and without a sacrifice arrangement.

Savings shown are the marginal rate minus the 15% contributions tax. The 2% Medicare levy adds a further 2 cents per dollar once your taxable income is above $35,013 (the ATO's 2025-26 threshold), where the full levy applies. Earners in the 15% bracket gain minimal benefit from salary sacrifice into super.

Who Uses This Salary Sacrifice Calculator?

Australian employees earning above $45,000 per year benefit most from salary sacrifice, as their marginal tax rate exceeds the 15% super contributions tax rate.

• Full-time employees earning $60,000 to $200,000 who want to maximise retirement savings while minimising taxation
• Employees approaching retirement (aged 50+) who want to accelerate super growth before accessing their balance at preservation age
• High-income earners above $135,000 in the 37% or 45% income tax brackets, where the tax saving per dollar sacrificed is largest
• HR and payroll professionals advising staff on salary packaging options and concessional contribution limits
• Victorian public-sector and health workers who salary package through their employer and want to see the result against state-specific pay: the pay calculator vic page covers Victoria
• Financial planners modelling salary sacrifice scenarios for clients alongside the Superannuation Calculator to project long-term super balances

How Does Salary Sacrifice Compare to No Sacrifice?

Salary sacrifice reduces take-home pay but increases total super contributions and delivers a net tax saving at every marginal rate above the 15% contributions tax rate.

The tax saving increases with your marginal rate. At 30%, every $1,000 sacrificed saves $300 in income tax (minus $150 in contributions tax = $150 net). At 37%, it saves $220 net per $1,000.

What Are the Contribution Caps for Salary Sacrifice?

The concessional contribution cap for FY2026-27 is $32,500 per year, covering employer SG contributions, salary sacrifice, and personal deductible contributions combined.

How the Concessional Cap Works

Your employer's compulsory 12% superannuation guarantee counts toward the $32,500 cap. On a $100,000 salary, your employer contributes $12,000, leaving $20,500 of cap room for salary sacrifice. On a $150,000 salary, employer SG is $18,000, leaving only $14,500 of cap room. If you exceed the cap, the excess is added to your assessable income and taxed at your marginal rate, less a 15% offset.

What Is Division 293 Tax?

"Division 293" applies an additional 15% tax on concessional contributions when your income plus concessional super contributions exceed $250,000. This brings the total super contributions tax to 30% instead of 15%. Even at 30%, salary sacrifice remains beneficial for high-income earners because the top marginal income tax rate of 45% plus the 2% Medicare levy totals 47%, still 17 percentage points higher than Division 293 taxation. Check your total assessable income using the Income Tax Calculator to determine if Division 293 applies to your situation.

What Are Common Salary Sacrifice Mistakes?

The most common salary sacrifice mistake is exceeding the $32,500 concessional cap: the excess is added to your assessable income and taxed at your marginal rate, less a 15% offset. See the concessional contributions cap guide.

1. Exceeding the concessional cap: Forgetting that employer SG contributions count toward the $32,500 cap. On a $120,000 salary, employer SG is $14,400, leaving only $18,100 of cap room, not the full $32,500.
2. Ignoring the HECS-HELP impact: Reportable super contributions are added back to "repayment income" when calculating HECS-HELP repayments. Salary sacrifice does not reduce your HECS-HELP obligation.
3. Sacrificing on a low marginal rate: Employees in the 15% income tax bracket ($18,201 to $45,000) gain nothing at that rate from salary sacrifice into super in FY2026-27, because the 15% income tax saved equals the 15% contributions tax. Any gain or loss comes only from the Medicare levy and the Low Income Tax Offset at your income, and the sacrificed money stays in super until you meet a condition of release.
4. Reducing borrowing capacity: Lenders assess income after salary sacrifice deductions. A large annual sacrifice lowers the income a lender counts, which can reduce how much you can borrow.
5. Not using carry-forward unused cap amounts: Since 1 July 2018, unused concessional cap amounts carry forward for up to 5 years if your total super balance is below $500,000. Employees who do not use carried-forward amounts give up that extra concessional tax saving.

What Changed for Salary Sacrifice in FY2026-27?

The concessional cap rose to $32,500 on 1 July 2026 (from $30,000), the second income tax rate fell to 15%, and Payday Super now requires employers to pay SG (still 12%, the legislated ceiling) each payday. The SG rate itself last rose on 1 July 2025, from 11.5% to 12%.

On a $100,000 salary, employer SG rose from $11,500 to $12,000, so cap room under the then $30,000 cap fell from $18,500 to $18,000. From 1 July 2026 the cap rose to $32,500, so the room on $100,000 is now $20,500. The Stage 3 income tax cuts from 1 July 2024 replaced the 32.5% rate with 30% and moved the top of that bracket from $120,000 to $135,000, so the saving per dollar sacrificed on $45,001 to $135,000 is now 15 cents. Use the Gross Pay Calculator to determine your total gross salary before modelling sacrifice scenarios.

What Items Are Available for Salary Sacrifice?

Salary sacrifice benefits fall into 3 categories: superannuation contributions, FBT-exempt items, and FBT-liable items. The table shows the FBT status, tax outcome and cap for each benefit.

The "Electric Car Discount" (introduced 1 July 2022) makes battery electric vehicles, hydrogen fuel cell vehicles, and plug-in hybrids first held and used before 1 April 2025 FBT-exempt under a novated lease. Under the Electric Car Discount, an eligible EV attracts no FBT and the sacrificed lease amount is not taxed as income. Learn more about vehicle packaging in our Novated Lease Guide.

Who Benefits Most from Salary Sacrifice?

Employees in higher income tax brackets benefit the most because the gap between their marginal tax rate and the 15% super contributions tax rate is largest. A taxpayer in the 45% bracket saves $0.30 per dollar sacrificed, while a taxpayer in the 15% bracket saves nothing on income tax (15% in, 15% contributions tax out), apart from any Medicare levy and Low Income Tax Offset change at their income.

Three groups benefit the most from salary sacrifice arrangements:

• High-income earners ($135,000+): The 37% and 45% marginal rates create the largest gap above the 15% super tax rate, producing savings of $2,200 to $3,000 per $10,000 sacrificed
• Employees approaching retirement (age 50–67): Carry-forward rules allow lump-sum catch-up contributions to build super balances before retirement
• Not-for-profit sector workers: Access to FBT-exempt packaging of everyday living expenses (rent, mortgage, groceries) of about $15,900 a year at PBIs and health promotion charities, or about $9,010 at public hospitals, produces savings even at lower income levels

Employees earning below the tax-free threshold of $18,200 are worse off salary sacrificing into super because the 15% contributions tax exceeds their 0% income tax rate. In the 15% bracket ($18,201 to $45,000) the income tax saved equals the 15% contributions tax, so any gain or loss comes from the Medicare levy and the Low Income Tax Offset at your income. You do not claim the offset: the ATO works it out when you lodge your tax return. The calculator above includes both.

What Are the Risks and Downsides?

Salary sacrifice reduces take-home pay immediately. The tax saving comes with lower disposable income each pay cycle. Use the calculator above to check that the reduced take-home pay covers your expenses before you sign the agreement.

Check these seven risks before you enter a salary sacrifice arrangement:

1. Reduced cash flow: Every dollar sacrificed is a dollar removed from your take-home pay. Budget accordingly using a fortnightly or monthly breakdown from our Pay Calculator
2. Super preservation: Salary sacrificed into super is locked until a condition of release is met, typically reaching age 60 and retiring. Early access is restricted to severe financial hardship, terminal illness, or compassionate grounds
3. HECS-HELP is unaffected: The ATO calculates HECS repayments using "Repayment Income" which adds back reportable super contributions and reportable fringe benefits. Salary sacrifice does not reduce HECS obligations. See our HECS-HELP Guide for the full repayment structure
4. Exceeding the concessional cap: Contributions beyond $32,500 (including employer SG, and before any carry-forward) are taxed at the employee's marginal rate less a 15% offset
5. Impact on government benefits: Family Tax Benefit, the Child Care Subsidy and Parental Leave Pay are income-tested on adjusted taxable income, which adds back reportable super contributions. Salary sacrificing into super does not lower your income for these tests
6. Employer insolvency risk: If your employer becomes insolvent before remitting salary sacrifice contributions to your super fund, those contributions may be treated as unpaid wages
7. No retrospective changes: Once a pay period passes, the sacrifice cannot be reversed. Only future pay periods can be adjusted

Step-by-Step: How to Set Up Salary Sacrifice

Setting up a salary sacrifice arrangement requires a written agreement with your employer before the relevant pay period. The process takes 1 to 4 weeks depending on your employer's payroll cycle and approval process.

1. Calculate your cap space: Check your current employer SG contributions (12% of your gross salary) and subtract from the $32,500 concessional cap. The result is your maximum sacrifice amount for super
2. Determine the right amount: Model the impact on your take-home pay using the Salary Sacrifice Calculator. Ensure the reduced fortnightly pay covers rent, mortgage repayments, groceries, and other essential expenses
3. Request the arrangement in writing: Submit a written request to your employer or HR department specifying the dollar amount per pay period, the benefit type (super, novated lease, device), and the desired start date
4. Employer approves and adjusts payroll: Your employer confirms the arrangement and updates the payroll system. The first adjusted pay slip reflects the lower gross salary and reduced PAYG withholding
5. Verify your pay slip: Check that the sacrificed amount, adjusted gross income, reduced PAYG, and super contribution match the agreed figures. Report discrepancies to payroll immediately
6. Review annually: Reassess the arrangement at the start of each financial year. Changes in salary, tax brackets, or the concessional cap (indexed to AWOTE in $2,500 increments) may require adjustment

How Does Fringe Benefits Tax Affect Salary Sacrifice?

Fringe Benefits Tax is a 47% tax imposed on employers who provide non-cash benefits to employees. FBT applies to most salary sacrifice items except superannuation, certain portable electronic devices used primarily for work, and eligible electric vehicles.

When an item attracts FBT, the employer bears the tax liability. In practice, most employers pass the FBT cost directly to the employee through payroll adjustments, which removes any net tax benefit. On a $40,000 internal combustion engine (ICE) car under the statutory formula, the taxable value is $8,000 (20% of the cost) and the FBT is about $7,822 a year, which is why most novated leases on petrol cars use post-tax employee contributions to reduce the taxable value to nil.

FBT-exempt items deliver the full tax benefit because no additional tax applies. The 3 most common FBT-exempt salary sacrifice categories are:

• Superannuation contributions: Exempt from FBT, taxed at 15% inside the fund
• Eligible electric vehicles: FBT-exempt under the Electric Car Discount when the vehicle value is below the fuel-efficient luxury car tax threshold of $91,661
• Portable electronic devices: Laptops, tablets, and mobile phones used primarily for employment duties (limited to 1 device per FBT year per category)

Read the full breakdown of FBT categories, rates, and exemptions on our Fringe Benefits Tax Guide.

Related Australian Tax Calculators

Salary sacrifice is one component of your total pay package. These calculators model the other components that affect your take-home pay and superannuation balance.

• Superannuation Calculator: Project your total super balance at retirement, including employer SG and salary sacrifice contributions.
• Income Tax Calculator: See the full income tax brackets, Low Income Tax Offset (LITO) and Medicare levy for FY2026-27.
• Take-Home Pay Calculator: Calculate your net pay after tax, Medicare, and HECS deductions on any salary.
• HECS-HELP Calculator: Model your HECS-HELP repayment under the new marginal system, including the impact of reportable super contributions.
• Pay Rise Calculator: Compare the after-tax value of a pay rise versus increasing your salary sacrifice amount.

Frequently Asked Questions