Salary Sacrifice Super: How Much Tax Can You Save in 2026-27?

Putting money into super before tax is the single most powerful tax saver available to most Australians. Instead of losing up to 47 cents in the dollar, you pay just 15% inside super. From 1 July 2026 the yearly cap rises to $32,500. Here's how to make the most of it.

Why This Matters

Every dollar moved from your pay into super before tax is taxed at 15% instead of your marginal rate. For someone in the 47% bracket that is an instant saving of about 30 cents per dollar, plus Medicare levy. Done consistently, this one habit can be worth tens of thousands over a working life, and the higher $32,500 cap for 2026-27 gives you more room than ever.

Who It Applies To

Employees can ask their employer to salary sacrifice part of their pay into super. Sole traders and anyone else can make a personal contribution and claim a deduction in their return. Both approaches share the same cap.

Key Rules for the 2026-27 Income Year

• The cap is $32,500 for 2026-27. It covers your employer's 12% super guarantee, salary sacrifice and personal deductible contributions combined.
• Contributions are taxed at 15% inside the fund. That is usually far below your marginal rate, which is where the saving comes from.
• Sole traders must lodge a notice of intent. Send the form to your super fund and receive its acknowledgment before you lodge your return.
• Timing decides the year. A contribution counts in the year the fund receives it, so pay by mid-June to be safe.
• High earners pay Division 293 tax. If your income plus contributions exceed $250,000, an extra 15% applies, still usually cheaper than the 47% top rate.

Work out your space first: the $32,500 cap includes what your employer already pays, so OzLedger can model a salary-sacrifice strategy that uses your remaining room without going over.

Common Mistakes to Avoid

• Exceeding the cap. Excess contributions are taxed at your marginal rate, so track employer super across all jobs.
• Skipping the notice of intent. No valid, acknowledged notice means no deduction. The ATO applies this strictly.
• Paying on 30 June. If the fund receives the money on 1 July, it counts in the next year.
• Sacrificing too much. Super is locked away until preservation age, so keep enough take-home pay to live comfortably.

A Practical Example

Marcus earns $120,000 as an employee. His employer pays $14,400 in super guarantee, leaving about $18,100 of cap space. He salary-sacrifices $1,000 a month. That $12,000 would have lost roughly $3,840 to tax and Medicare levy in his hands; instead, his fund pays $1,800. Marcus saves about $2,040 a year, and his retirement balance grows faster at the same time.

Instead of losing up to 47 cents in the dollar, you pay just 15% inside super.

Key Takeaways