How much can you salary sacrifice into super? A guide to caps, tax, and take-home pay

Why the mix-up between gross salary, package, and take-home?

When you see a job ad quoting a salary, it’s often listed as a gross annual figure – before tax, before the Medicare levy, and before any salary sacrifice arrangements. But if you’re considering salary sacrificing into super, you need to understand how much you can actually put away and how it changes the amount that lands in your bank account each fortnight.

Salary sacrifice is an agreement with your employer to divert part of your before-tax pay into your super fund. These are concessional contributions, taxed inside super at 15% instead of your marginal rate. The big question is how much can you salary sacrifice into super without triggering extra tax.

The concessional cap for 2026-27

The Australian Taxation Office sets a limit on how much you can contribute from before-tax income each year. From 1 July 2026, the general concessional contributions cap is $32,500. This includes your employer’s compulsory super guarantee (12% of your ordinary time earnings) plus any salary sacrifice amounts. If you exceed the cap, the excess is added to your assessable income and taxed at your marginal rate, minus a 15% offset for the tax already paid by your fund.

For example, if your employer pays $12,000 in super guarantee, you can salary sacrifice up to $20,500 more without exceeding the $32,500 cap. But if your total before-tax contributions go over, you could face a higher tax bill – up to 94% if you don’t release the excess.

Salary sacrifice does not reduce your super guarantee

A common misunderstanding is that salary sacrificing lowers the amount your employer must pay as super guarantee. That’s not the case. The ATO is clear: your employer must calculate the 12% super guarantee on your ordinary time earnings as if no salary sacrifice existed. So your super fund still receives the full compulsory contribution on top of any sacrificed amount. This is why salary sacrifice is a genuine way to boost your retirement savings without cutting into your employer’s obligations.

How it affects your take-home pay and Medicare levy

When you salary sacrifice, your taxable income drops by the sacrificed amount. That means less income tax is withheld each pay cycle, and your take-home pay increases. The Medicare levy – 2% of taxable income for most full-time earners – also falls because it’s calculated on the lower figure. The latest published single-person Medicare thresholds are $28,011 and $35,013; if your reduced income falls between these, the levy is shaded at 10 cents per dollar over the lower threshold. For most full-time salaries, you’ll pay the full 2% on the reduced amount.

Consider a worker earning the full-time adult ordinary time average of $108,352 a year. If they salary sacrifice $10,000 into super, their taxable income becomes $98,352. The tax saved at the 30% marginal rate plus 2% Medicare levy is $3,200, while the super fund pays 15% ($1,500) on the contribution. The net benefit is $1,700, and their fortnightly take-home rises because less tax is deducted.

Division 293 tax for high earners

If your combined income and concessional contributions exceed $250,000, you may be liable for Division 293 tax – an extra 15% on the excess or your contributions, whichever is less. This reduces the tax concession you get from salary sacrifice. The ATO applies this on top of the standard 15% contributions tax, so your effective tax rate on those contributions could be 30%.

Non-concessional contributions and the total super balance

You can also make after-tax (non-concessional) contributions, but they don’t reduce your taxable income. The non-concessional cap for 2026-27 is $130,000. If your total super balance at the end of the previous financial year is $2.1 million or more, your non-concessional cap is zero. Salary sacrifice is a concessional contribution, so it counts toward the $32,500 cap, not the non-concessional one.

Putting it together

To work out how much can you salary sacrifice into super, start with your gross salary, subtract your employer’s super guarantee, and see how much room you have under the $32,500 cap. Remember that salary sacrifice doesn’t reduce your super guarantee, and it lowers your taxable income, boosting your take-home pay. Use the Super guide for more details on caps and the Take-home pay calculator to see the impact on your fortnightly pay.

Always check your total super balance and income level to avoid unexpected tax. The ATO provides clear rules, but your individual circumstances – such as HELP debt or the Medicare levy surcharge – can change the outcome. This estimate is not a tax assessment, so consult a professional for personalised advice.