Salary Sacrifice Into Super: How Much Tax Can You Actually Save?

Salary sacrifice into superannuation is one of the most effective legal tax minimisation strategies available to Australian employees. The more you earn, the more you save. Here's exactly how it works, with worked examples at three common income levels.

How salary sacrifice into super works

Normally, your employer pays you a salary. You pay income tax at your marginal rate on that salary, then spend or save whatever's left.

With salary sacrifice, you redirect some pre-tax salary directly into your super fund. That money never hits your bank account — it goes straight into super. You pay 15% contributions tax on it in the fund (instead of your marginal rate), and you reduce your taxable income.

The tax saving = (marginal rate − 15%) × amount sacrificed.

The concessional cap: how much you can sacrifice

All pre-tax contributions to super — your employer's SG contributions plus any salary sacrifice — are "concessional contributions." The cap is $30,000 per year for both 2024–25 and 2025–26.

If your employer pays $10,800 SG (12% on $90,000), you have $19,200 remaining to salary sacrifice within the cap.

Important: From 2019, you can carry forward unused concessional cap from previous years (up to 5 years back) if your total super balance is under $500,000. This is incredibly valuable if you've had a career break or high-income year.

Worked examples: tax saved at different income levels

Example 1: $80,000 salary (marginal rate: 30%)

Employer SG: $9,600 (12%). Remaining cap: $20,400.

You decide to sacrifice an extra $10,000/year into super.

Effective tax saving per dollar sacrificed: 15¢ (30% − 15% = 15¢)

Example 2: $120,000 salary (marginal rate: 30%)

Employer SG: $14,400 (12%). Remaining cap: $15,600.

You sacrifice the full remaining cap: $15,600.

• Taxable income reduced from $120,000 to $104,400
• Income tax saved: $4,680 (30% × $15,600)
• Super contributions tax paid: $2,340 (15% × $15,600)
• Net tax saving: $2,340/year

Example 3: $180,000 salary (marginal rate: 37%)

Employer SG: $21,600 (12%). Remaining cap: $8,400.

You sacrifice the remaining $8,400.

• Taxable income reduced from $180,000 to $171,600
• Income tax saved: $3,108 (37% × $8,400)
• Super contributions tax paid: $1,260 (15% × $8,400)
• Net tax saving: $1,848/year

Note: High earners earning over $250,000 pay Division 293 tax — an additional 15% on concessional contributions. This reduces the salary sacrifice benefit at very high income levels.

Comparing the effective tax saving by income

Is salary sacrifice worth it at lower incomes?

At the 16% marginal rate (income under $45,000), the saving is only 1¢ per dollar. You'd save just $100 in personal tax by sacrificing $10,000, while your take-home pay drops by $9,900. That's a poor trade-off unless you're specifically trying to boost super and can genuinely spare the cashflow.

The sweet spot is the 30% bracket ($45,001–$135,000) — which covers most Australian workers. You save 15¢ per dollar, and the super contribution still grows for retirement.

Super inside vs outside: the numbers

The other advantage of keeping money inside super (aside from the tax on contributions) is the earnings tax rate. Inside super, investment earnings are taxed at 15% (in accumulation phase), compared to your marginal rate on income and CGT on investments held outside.

In pension phase (over 60), earnings are 0% tax. This is why wealthy Australians maximise super throughout their careers.