How Much Can I Salary Sacrifice?
Salary sacrifice is a popular way to reduce your taxable income by swapping part of your salary for benefits such as extra superannuation, a car, or other non-cash perks. The key question is: how much can you actually sacrifice? The answer depends on the type of benefit, your employer’s policy, and limits set by the Australian Taxation Office (ATO).
The National Average as a Reference
Before diving into salary sacrifice, it helps to know where your pay sits. The national full-time adult ordinary-time average is $2,083.70 a week, or about $108,352 a year (ABS Average Weekly Earnings, May 2026, multiplied by 52). This is the line on the Average Line site. If you earn around that figure, salary sacrifice can be a smart way to lower your tax bill, especially if you are in a higher tax bracket.
For context, the full-time median is about $90,532, and the all-employees median is about $74,100 (ABS Employee Earnings, August 2025). The national minimum wage from 1 July 2026 is $26.44 an hour, $1,004.90 a week, or about $52,255 a year on a 38-hour week. Award minimums rose by 4.75% at the same time.
How Salary Sacrifice Works
When you salary sacrifice, you agree with your employer to reduce your pre-tax salary in exchange for a benefit. The sacrificed amount is not included in your assessable income, so you pay less income tax and Medicare levy. However, the benefit itself may be subject to fringe benefits tax (FBT) or other rules. The most common form of salary sacrifice is for superannuation, because contributions are taxed at a lower rate (15%) within the fund, and the employer can claim a deduction.
Limits on Salary Sacrifice
The ATO caps how much you can sacrifice into super each year under the concessional contributions cap. For the 2026-27 financial year, the cap is $30,000. This includes your employer’s compulsory super guarantee (currently 11.5% of your ordinary time earnings) plus any salary sacrifice contributions you make. If you exceed the cap, the excess is taxed at your marginal rate plus an interest charge. So it’s important to keep track.
For other benefits like a car or electronic devices, there is no fixed dollar cap, but the benefit must be provided under a valid salary sacrifice arrangement and may attract FBT. The ATO has rules about what counts as a genuine sacrifice and what is considered a fringe benefit. Generally, you cannot sacrifice below the national minimum wage, and the arrangement must be in writing.
Take-Home Pay After Salary Sacrifice
Let’s look at a resident earning the national full-time average of $108,352. Under the 2026-27 tax rates, tax on that income is:
- Nil on the first $18,200
- 15% on the next $26,800 ($4,020)
- 30% on the next $90,000 (but only $63,352 falls into this bracket, so $19,005.60)
- Total tax before offsets: $23,025.60
- Plus Medicare levy of 2%: $2,167.04
- Total tax and levy: $25,192.64
- Net take-home pay: $83,159.36 per year, or about $1,599.22 per week.
Now, if you salary sacrifice $10,000 into super, your taxable income drops to $98,352. The tax becomes:
- Nil on $18,200
- 15% on $26,800 ($4,020)
- 30% on $53,352 ($16,005.60)
- Total tax: $20,025.60
- Medicare levy: $1,967.04
- Total: $21,992.64
- Net take-home pay: $76,359.36 per year, or about $1,468.45 per week.
You have $10,000 in super (taxed at 15% inside the fund, so $8,500 net contribution) and your take-home cash is lower by about $130 per week. But your overall wealth may increase because super is a long-term investment. The trade-off depends on your personal goals.
Comparing to Medians and Minimums
If you earn the full-time median of $90,532, your marginal tax rate is 30% (up to $135,000). Salary sacrificing into super can save you 30% tax plus 2% Medicare levy, so 32 cents in the dollar. For someone on the minimum wage of $52,255, the marginal rate is 15% (plus 2% Medicare), so the benefit is smaller. The higher your income, the more tax you save by sacrificing.
State Differences
Your take-home pay also depends on where you live, but salary sacrifice is a federal tax arrangement. The state averages give context: New South Wales full-time average is about $109,658; Victoria $106,137; Queensland $106,064; South Australia $102,450; Western Australia $115,825; Tasmania $96,008; Northern Territory $103,173; Australian Capital Territory $119,090. If you earn above your state average, salary sacrifice might be particularly attractive.
Practical Steps
To set up salary sacrifice, talk to your employer or payroll. You need a written agreement. For super, you can also make personal deductible contributions (if you are eligible) and claim a tax deduction. The ATO allows you to contribute up to the cap from any source. Keep records and check your contributions each year.
More Resources
For a detailed look at how your salary compares, place a salary on the line to see where you stand against the national average. To understand how the figures are calculated, see how the figures are set.
Summary
So, how much can you salary sacrifice? For super, up to the concessional cap of $30,000 (including employer contributions). For other benefits, the amount is limited by FBT rules and your employer’s policy. Always check with a tax professional or the ATO to ensure you stay within limits and get the best outcome for your situation.