Salary sacrifice (or salary packaging) means agreeing with your employer to redirect part of your pre-tax salary into your super fund instead of your bank account. Because it comes out before income tax, it's a common way to cut your tax bill while building retirement savings.
Why it saves tax
Salary normally gets taxed at your marginal rate — up to 45%, plus the 2% Medicare levy. Money you salary-sacrifice into super is instead taxed at just 15% inside the fund (the concessional contributions tax). The difference between your marginal rate and 15% is the tax you save on every sacrificed dollar. See how much tax you pay in Australia for the marginal rates.
The concessional cap
There's a limit on concessional (before-tax) contributions: $30,000 in 2025-26 and $32,500 in 2026-27. Crucially, this cap includes your employer's Superannuation Guarantee (12%), so your available headroom to sacrifice is the cap minus what your employer already pays. Going over the cap means the excess is taxed at your marginal rate (with an offset), removing the benefit.
Who benefits most
The higher your income, the larger the gap between your marginal rate and super's 15%, so higher earners save the most. At low incomes the benefit is small or nil. (Very high earners over $250,000 also pay an extra 15% under Division 293, which reduces — but usually doesn't eliminate — the benefit.)
Work out your own saving
The exact saving depends on your salary and how much you sacrifice. The super salary sacrifice calculator shows your tax saved and the impact on your take-home pay.
Source: ATO concessional contributions caps and contributions tax. Verified for 2025-26 and 2026-27. Excludes Division 293 and the low income super tax offset.