Salary Sacrifice: How to Save Tax and Boost Your Super

Salary sacrifice is one of the simplest tax optimisation strategies available to Australian workers. You redirect part of your pre-tax salary into super, where it's taxed at just 15% instead of your marginal rate. The result: you pay less tax and your retirement savings grow faster.

How It Works

Instead of receiving your full salary as cash (and paying tax at your marginal rate), you ask your employer to put a portion directly into your super fund before tax is deducted. The contribution is taxed at 15% inside super — compared to 30%, 37%, or 45% if you took it as salary.

For example, on an $85,000 salary in the 30% bracket, sacrificing $200/month costs you only $170/month in take-home pay. That's because the $200 would have been taxed at 30% ($60 tax) if taken as salary, but is only taxed at 15% ($30 tax) inside super. You save $30/month — $360/year — while contributing $2,400/year extra to super.

How Much Should You Sacrifice?

The concessional contributions cap is $30,000/year for 2025–26. This cap includes your employer's 12% super guarantee, so if you earn $100,000 your employer already contributes $12,000 — leaving you room to sacrifice up to $18,000 more.

If your super balance is under $500,000, you can also carry forward unused cap amounts from the previous 5 years. This means if you haven't maxed out your contributions in recent years, you may be able to sacrifice more than $30,000 in a single year.

Who Benefits Most?

The higher your marginal rate, the bigger the saving per dollar sacrificed. At the 45% rate ($190k+), every dollar sacrificed saves you 30 cents. At the 37% rate ($135k–$190k), 22 cents. At the 30% rate ($45k–$135k), 15 cents. Below $45,000, the benefit is minimal (only 1 cent per dollar saved).

To see how the extra super compounds over your career, use our Super Calculator or check when you can retire with the Retirement Calculator.