The basic swap
Normally your employer pays you a salary, tax is withheld at your marginal rate, and whatever's left is yours to spend or save. Salary sacrificing into super changes the order: you agree with your employer to redirect part of your pre-tax salary into your super fund instead of your bank account.
That redirected amount is taxed at 15% inside the fund (30% if your total income is over $250,000), not at your marginal rate. For anyone earning above about $45,000, the marginal rate on that slice of income is at least 30%, so the super fund's 15% is the cheaper option. The saving is the gap between the two rates.
The concessional contributions cap
This concessional tax treatment isn't unlimited. For 2026–27 the cap is $32,500 a year, and it covers both your employer's compulsory super guarantee payments and anything you salary sacrifice on top. If your employer already pays close to the cap in compulsory contributions, you have less room to sacrifice before hitting it.
If you've had less than $500,000 in super and haven't used your full cap in the last five years, unused amounts can sometimes be carried forward, which is worth asking a financial adviser about if you're planning a larger catch-up contribution.
Worked example
Say you earn $95,000 and sacrifice $10,000 a year into super, on top of the super guarantee your employer already pays.
- Without sacrificing: that $10,000 is taxed at your 30% marginal rate, leaving $7,000.
- Sacrificing into super: the same $10,000 is taxed at 15% inside the fund, leaving $8,500.
- Net saving: $1,500 a year, locked away in super until you can access it under preservation rules.
That last point matters: the money isn't available until retirement (or another condition of release), so this only makes sense for money you don't need before then.
Questions people actually ask
How does salary sacrificing into super save tax?+
The sacrificed amount is taxed at 15% inside your super fund instead of your marginal rate, which is higher for most incomes above $45,000.
What is the concessional cap for 2026–27?+
$32,500 a year, covering employer super guarantee contributions plus salary sacrifice combined.
What happens if I go over the cap?+
The excess is taxed at your marginal rate plus a charge, instead of getting the concessional 15% rate.
General information only, based on ATO guidance current as of September 2026, not personal financial advice. Contribution caps are indexed and can change; confirm current-year figures at ato.gov.au and speak with a licensed financial adviser about your own situation.