Understanding salary sacrifice in Australia
Salary sacrifice is an arrangement where you agree to forgo part of your pre-tax salary in exchange for benefits provided by your employer. Common examples include additional superannuation contributions, a car through a novated lease, or other fringe benefits such as laptops or gym memberships. The key advantage is that the sacrificed amount is not subject to income tax, which can reduce your overall tax bill. However, the amount you can sacrifice is not unlimited—it is governed by rules from the Australian Taxation Office (ATO) and, in some cases, by the type of benefit.
How much can you salary sacrifice?
There is no single dollar figure that answers “how much can you salary sacrifice.” The limit depends on what you are sacrificing for and your individual circumstances. For superannuation, the ATO sets an annual cap on concessional contributions, which includes salary sacrifice. This cap changes each financial year. Our on-site notes do not include the current cap, so you should refer to the ATO for the exact amount. If you exceed the cap, the excess is taxed at your marginal rate plus an interest charge.
For other benefits like cars under a novated lease, the amount you can sacrifice is effectively limited by the cost of the benefit and the fringe benefits tax (FBT) rules. Employers may also have internal policies that cap salary sacrifice arrangements. Additionally, you cannot sacrifice so much that your remaining cash salary falls below the national minimum wage. From 1 July 2026, the minimum wage is $26.44 per hour, $1,004.90 per week, or about $52,255 per year on a 38-hour week (Fair Work).
Salary sacrifice and the national full-time average
The national full-time adult ordinary-time average is $2,083.70 per week, or about $108,352 per year (ABS Average Weekly Earnings, May 2026). This is the line used on this site. When you salary sacrifice, your gross salary (the amount you earn before tax) decreases. For example, if your original salary is $120,000 and you sacrifice $20,000 into super, your gross salary becomes $100,000. That is below the national average. The tool on this site will show you exactly how far your pay sits from that line.
It is important to distinguish between averages and medians. The full-time median is about $90,532 (ABS Employee Earnings, August 2025), and the all-employees median is about $74,100. The minimum wage is much lower. Salary sacrifice can move your effective pay closer to or further from these benchmarks depending on your starting salary and the amount sacrificed.
Tax implications of salary sacrifice
Salary sacrifice reduces your taxable income, which can lower the amount of tax you pay. For the 2026–27 financial year, the resident tax rates are:
- Nil on income up to $18,200
- 15% on income from $18,201 to $45,000
- 30% on income from $45,001 to $135,000
- 37% on income from $135,001 to $190,000
- 45% on income above $190,000
Plus a Medicare levy of 2% (before any reductions). By sacrificing salary, you may drop into a lower tax bracket or reduce the amount taxed at higher rates. However, the benefit must be weighed against the caps and any FBT that may apply.
State differences
The national average masks variation across states. For instance, the full-time average in the Australian Capital Territory is about $119,090, while in Tasmania it is about $96,008. If you salary sacrifice, your pay relative to your state’s average may differ. You can explore state averages on the States and territories page.
Putting your salary on the line
To see where your pay sits against the national full-time average, use the tool on this site. Enter your yearly salary before tax (after any salary sacrifice arrangement). The tool will show your weekly and hourly pay on a 38-hour week, plus the distance from the average. For more detail on how these figures are set, see How the figures are set.