Salary Sacrifice Super 2026-27: The New $32,500 Cap and How Much Tax You Save
The concessional super cap rises to $32,500 from 1 July 2026. See how much salary sacrifice saves at every income level, how Division 293 affects high earners, and how carry-forward works.
From 1 July 2026, the concessional superannuation contributions cap increases from $30,000 to $32,500 per year. If you salary sacrifice into super, you now have an extra $2,500 of tax-effective contribution room — and if you weren't maxing the cap before, this is a good moment to revisit how much you're contributing.
Salary sacrifice into super is one of the most straightforward tax strategies available to Australian employees. You redirect pre-tax salary into super, where it's taxed at 15% instead of your marginal rate. The saving can range from $850 to $3,200 per $10,000 sacrificed depending on your income.
This article is focused specifically on the super component of salary sacrifice and the 2026-27 cap changes. For the broader salary sacrifice guide (cars, laptops, novated leases), see our complete salary sacrifice guide.
What counts toward the $32,500 concessional cap
The $32,500 cap is not just for salary sacrifice — it covers all concessional (pre-tax) contributions:
| Contribution type | Counts toward cap? |
|---|---|
| Employer Superannuation Guarantee (12% SGC) | Yes |
| Salary sacrifice additional contributions | Yes |
| Personal contributions claimed as a tax deduction | Yes |
| Non-concessional (after-tax) contributions | No — separate cap applies |
| Government co-contributions | No |
What this means in practice: If your employer already contributes 12% SGC and your salary is $120,000, your employer is contributing approximately $14,400 per year. That leaves you with $18,100 in remaining cap to fill via salary sacrifice before hitting the $32,500 limit.
At $150,000 salary, employer SGC is $18,000 — leaving $14,500 of cap remaining for additional salary sacrifice.
Exceeding the cap triggers excess concessional contributions tax: the excess is included in your assessable income and taxed at your marginal rate, with a 15% tax offset for contributions tax already paid inside the fund.
Use our Superannuation Calculator to project how additional contributions affect your retirement balance over time.
How much tax does salary sacrifice into super actually save?
The saving is the difference between your marginal income tax rate (including Medicare levy) and the 15% contributions tax inside super.
| Taxable income (2026-27) | Marginal rate | + Medicare | Total rate | Super contributions tax | Tax saving per $10,000 sacrificed |
|---|---|---|---|---|---|
| $18,201 – $45,000 | 15% | 2% | 17% | 15% | $200 |
| $45,001 – $135,000 | 30% | 2% | 32% | 15% | $1,700 |
| $135,001 – $190,000 | 37% | 2% | 39% | 15% | $2,400 |
| $190,001 – $250,000 | 45% | 2% | 47% | 15% | $3,200 |
| $250,001+ (Div 293 applies) | 45% | 2% | 47% | 30% | $1,700 |
The sweet spot for salary sacrifice is the 30% and 37% brackets. You save $1,700–$2,400 per $10,000 contributed. Above $250,000 income (where Division 293 applies), the saving drops back to $1,700 because the effective super tax rises to 30%.
Worked example: $110,000 salary
Daniel earns $110,000 and salary sacrifices $15,000 into super.
| Without sacrifice | With $15k sacrifice | |
|---|---|---|
| Gross salary | $110,000 | $110,000 |
| Salary sacrifice | — | $15,000 |
| Taxable income | $110,000 | $95,000 |
| Income tax + Medicare | ~$28,547 | ~$23,147 |
| Super contributions tax (15%) | — | $2,250 |
| Total tax paid | $28,547 | $25,397 |
| Net tax saving | — | $3,150 |
Daniel pays $3,150 less tax by routing $15,000 into super rather than taking it as salary.
Division 293: the high-earner consideration
Division 293 is an additional 15% tax on concessional super contributions for high-income earners. It applies when your income plus concessional contributions exceeds $250,000.
This makes the effective tax rate on super contributions 30% (15% contributions tax + 15% Division 293) — still well below the 47% top marginal rate, but less advantageous than for middle-income earners.
Who it affects:
- Someone earning $240,000 who salary sacrifices $15,000: $240,000 + $15,000 = $255,000 → $5,000 of contributions exceed the threshold → Div 293 tax on $5,000 × 15% = $750 extra
- Someone earning $260,000: already over $250,000 before any sacrifice → all concessional contributions attract Div 293
Does salary sacrifice reduce Division 293 income?
No — and this is a common misconception. Salary sacrifice reduces your taxable income, but Division 293 income is calculated as taxable income plus concessional contributions. The two movements cancel out. Salary sacrificing $15,000 reduces taxable income by $15,000 but increases concessional contributions by $15,000 — leaving Division 293 income unchanged.
The value of salary sacrifice for $250,000+ earners is still real (you save 17 cents per dollar vs paying 47 cents), but the mechanism is different from middle-income earners.
Carry-forward concessional contributions
If you haven't used your full concessional cap in prior years, you may be able to carry forward the unused amounts and make a larger contribution in a later year.
Rules:
- You can use unused cap space from the previous 5 financial years (from 2019-20 onward)
- Your total super balance (TSB) must be under $500,000 on 30 June of the prior year
- The oldest unused amounts are used first
- Contributions are still taxed at 15% (or 30% if Div 293 applies)
Example:
- Sam has been contributing only the SGC each year on a $90,000 salary (~$10,800/year)
- The $30,000 cap left approximately $19,200 unused each year for 5 years
- Accumulated unused cap: ~$96,000
- Sam receives a bonus and can now make a large personal deductible contribution — up to the unused balance, capped at the current year's limit plus carry-forward
This is particularly useful for people who took time off work, were lower earners in earlier years, or received a one-off windfall and want to reduce the tax on it.
The new $32,500 cap: who benefits most?
The $2,500 increase in the cap (from $30,000 to $32,500) has a modest but real impact on those who were already maxing their contributions:
| Marginal rate bracket | Extra saving from $2,500 cap increase |
|---|---|
| 30% (incl. Medicare 32%) | $425/year |
| 37% (incl. Medicare 39%) | $600/year |
| 45% (incl. Medicare 47%) | $800/year |
| 45% + Div 293 (30% super tax) | $425/year |
For most employees, this means reviewing whether your existing salary sacrifice arrangement captures the extra $2,500. If you had a fixed dollar amount set (e.g. $19,200 per year on top of SGC), the new cap allows an additional $2,500 to flow through.
Should you max the concessional cap?
Maxing the $32,500 cap makes strong sense in several situations:
Max it if:
- Your income is in the 30%, 37%, or 45% bracket — the tax saving is substantial
- You're approaching retirement and want to boost your super balance tax-efficiently
- You have unused carry-forward amounts and a one-off high-income year
- You're self-employed and can make personal deductible contributions
Think carefully if:
- Your income is in the 15% bracket — the tax advantage is minimal ($200 per $10,000)
- You have high-interest debt (mortgage above 6%, credit card debt) — the certain return of paying down debt may outperform the uncertain super return
- You need liquidity in the next 10–15 years — super is locked until 60 and can't be accessed early for most purposes
- You're already over the $500,000 TSB threshold — carry-forward rules don't apply and the long-term impact of extra contributions diminishes
The super benefit is permanent and tax-advantaged but illiquid. Balance it against paying down your mortgage or investing in your own name if you need access to those funds before 60.
How to set up salary sacrifice with your employer
Salary sacrifice is an arrangement between you and your employer — you ask them to pay part of your pre-tax salary directly to your super fund instead of to you.
Steps:
- Check your employment contract — some agreements have clauses about salary sacrifice. Most allow it; some have minimum income requirements.
- Contact your payroll or HR team — ask them to set up a salary sacrifice arrangement. Provide the dollar amount per pay period or a percentage of salary.
- Provide your super fund details — USI (Unique Superannuation Identifier) and your member number.
- Specify the amount — make sure the total (employer SGC + your sacrifice) stays under the $32,500 cap for 2026-27.
- Confirm it's reflected in your payslip — the sacrificed amount should appear as a pre-tax deduction, reducing your taxable salary.
The arrangement can usually be changed at any time with reasonable notice. Review it each July as the cap changes and your SGC contributions grow with pay rises.
Frequently asked questions
What is the concessional super cap for 2026-27?
The concessional contributions cap for FY 2026-27 (from 1 July 2026) is $32,500 per person. This covers all pre-tax contributions combined: employer SGC, salary sacrifice, and any personal contributions claimed as a tax deduction. The cap was $30,000 in 2025-26.
How much tax does salary sacrifice into super save?
The saving is the difference between your marginal rate (including Medicare levy) and the 15% contributions tax inside super. At a $100,000 salary (32% effective rate including Medicare), you save $1,700 in tax for every $10,000 salary sacrificed. At $160,000 (39% effective rate), the saving is $2,400 per $10,000. Above $250,000 income, Division 293 reduces the saving to $1,700 per $10,000.
What is Division 293 tax?
Division 293 is an additional 15% tax on concessional super contributions for high-income earners. It applies when your taxable income plus concessional contributions exceeds $250,000. This makes the effective tax rate inside super 30% (contributions tax 15% + Division 293 15%) — still below the 47% top personal rate, so super remains tax-effective.
Can I use unused concessional cap from previous years?
Yes, if your total super balance (TSB) was under $500,000 on 30 June of the prior year, you can carry forward unused concessional cap space from the previous five financial years (from 2019-20 onward). You can then contribute more than the standard annual cap in a high-income year.
Does salary sacrifice reduce my Division 293 income?
No. Division 293 income is calculated as your taxable income plus concessional contributions. Salary sacrifice reduces taxable income but increases concessional contributions by the same amount — so your Division 293 income is unchanged. You still pay Division 293 tax on contributions if your income + contributions exceed $250,000.
What happens if I exceed the $32,500 concessional cap?
Excess concessional contributions are included in your assessable income and taxed at your marginal rate. You receive a 15% tax offset for the contributions tax already paid inside the fund. The ATO automatically issues an excess concessional contributions assessment based on information from your super fund's annual report.
This article is for general information only and does not constitute financial, tax or legal advice. Individual circumstances vary. Consult a registered tax agent or licensed financial adviser before making decisions based on this information.
Written by
Mahi PatilSoftware engineer & personal finance enthusiast · Melbourne, Australia
Built Dolaro.com.au to create accurate, free Australian finance tools. Invests in Australian and global ETFs and writes about the topics researched firsthand. More about Mahi →