How much super can I salary sacrifice? A guide to caps and tax benefits

How much super can I salary sacrifice?

Salary sacrificing super is a popular way to boost your retirement savings while reducing your taxable income. But how much can you actually put in? The answer depends on the annual concessional contributions cap, your employer's super guarantee, and your personal financial situation.

What is salary sacrifice?

Salary sacrifice is an arrangement where you agree with your employer to forgo part of your pre-tax salary in exchange for additional super contributions. These contributions are taxed at 15% inside the super fund (up to the cap), which is often lower than your marginal income tax rate. The money goes into your super account and is preserved until you meet a condition of release, such as retirement.

The concessional contributions cap

The Australian Tax Office (ATO) sets an annual limit on how much you can contribute to super from pre-tax income. This is called the concessional contributions cap. It includes:

• Your employer's super guarantee (SG) contributions
• Any salary sacrifice contributions you make
• Personal contributions you claim as a tax deduction

For the 2026-27 financial year, the standard cap is typically around $30,000, but this figure is not confirmed in our on-site reference. You should check the ATO website or your super fund for the exact amount. If you are under 50, the cap may be lower; if you are over 50, you may have a higher cap depending on your total super balance.

How to calculate your salary sacrifice limit

To find out how much you can salary sacrifice, start with the annual concessional cap. Then subtract your employer's SG contributions. The remainder is your available headroom for salary sacrifice.

For example, if the cap is $30,000 and your employer pays $12,000 in SG (12% of a $100,000 salary), you can sacrifice up to $18,000. If you earn more, your SG will be higher, leaving less room. If you earn less than the maximum contribution base ($270,830), your SG is 12% of your ordinary time earnings.

Tax benefits of salary sacrifice

Salary sacrifice reduces your taxable income. Using the 2026-27 tax rates from our reference:

• Nil tax on income up to $18,200
• 15% on income from $18,201 to $45,000
• 30% on income from $45,001 to $135,000
• 37% on income from $135,001 to $190,000
• 45% on income above $190,000

Plus a 2% Medicare levy.

If you are in the 30% bracket, every dollar you salary sacrifice saves you 30 cents in tax (plus 2 cents Medicare levy), but the contribution is taxed at 15% inside super. That's a net saving of 17 cents per dollar. For higher earners, the saving is even greater.

How the Salary Index relates

The Salary Index measures gross ordinary-time earnings against the national line of 100 (full-time adult ordinary-time earnings of $108,352 per year). Salary sacrifice does not change your gross earnings for index purposes, but it does affect your take-home pay. For example, someone earning $120,000 (index ~110.8) who sacrifices $15,000 would have a taxable income of $105,000, but their gross pay for index calculation remains $120,000.

Important considerations

• Exceeding the cap: If you go over the concessional cap, the excess is taxed at your marginal rate plus an interest charge. Avoid this by tracking your contributions.
• Award and agreement rules: Some modern awards or enterprise agreements may restrict salary sacrifice. Check your pay guides or consult Fair Work.
• State differences: Your location doesn't affect the super cap, but state-based taxes or levies might. See states for more.
• Super guarantee: Your employer must still pay SG on your ordinary time earnings, even if you salary sacrifice. The SG is calculated on your gross salary before sacrifice.

Example scenario

Let's say you work in professional services (industry index 114.7) and earn $120,000 per year. Your employer pays 12% SG = $14,400. If the concessional cap is $30,000, you can sacrifice up to $15,600. By doing so, you reduce your taxable income to $104,400. Your tax saving (at the 30% bracket) would be about $4,680, plus Medicare levy savings. The $15,600 goes into super and is taxed at 15%, so $13,260 net contribution.

Where to get more information

For the exact concessional cap and your personal circumstances, visit the ATO website. You can also use our how the index works page to understand how your pay compares nationally. For industry-specific insights, see industries. And for more topics on pay and super, browse our topics.

Final thoughts

Salary sacrificing super can be a smart way to save for retirement and reduce tax, but you need to know your limits. The amount you can sacrifice depends on the annual cap and your employer's SG. Always check the latest cap from the ATO and consider seeking professional advice. The figures in this guide are based on the on-site reference and general Australian rules; they are not a substitute for personalised financial planning.